McColl’s shares fall as stores continue to suffer from Palmer & Harvey collapse
Sales in stores that were formerly supplied by Palmer & Harvey together recorded a 3.6% drop in revenues.
Shares in McColl’s tumbled more than 6% after the convenience store operator reported a drop in sales after being knocked by the collapse of wholesaler Palmer & Harvey.
Total like-for-like sales for the 11 weeks to February 11 slipped 2.2%, having been “held back” by sales in stores that were formerly supplied by the wholesaler and together recorded a 3.6% drop in revenues.
“Having experienced some availability issues towards the end of full year 2017 in our c.700 newsagents and smaller convenience stores supplied by Palmer & Harvey, their entry into administration on 28 November 2017 has led to further disruption during the early part of full-year 2018,” the company said in a trading update on Monday.
McColl’s said it had put contingency plans in place which included entering into a new short-term supply contract with Nisa in December, and starting its supply partnership with Morrisons earlier than planned in order to stock those same stores with tobacco.
“Whilst these contingency agreements have largely ensured continuity of supply, we continue to closely manage distribution to these stores and the disruption has impacted our sales performance,” it said.
McColl’s share price tumbled more than 6.4% or 16p to 233p in morning trading.
The convenience store operator also released full-year results on Monday, which showed the company benefiting from the acquisition of 298 stores from the Co-op last year.
It helped total revenues jump 19.1% to £1.1 billion for the full year to November 26 compared with £950 million a year earlier, though total like-for-like sales were up just 0.1%.
Annual pre-tax profits rose to £18.4 million from £17.7 million in 2016.
“We have delivered a strong financial performance with a step-up in sales and profitability propelled by our acquisition of 298 convenience stores, and by surpassing £1 billion in annual revenues for the first time we have demonstrated that this is now a business of real scale,” McColl’s chief executive Jonathan Miller said.
2018 is a strategically important year for McColl’s as we move to new supply arrangements, and continue to grow and improve the quality of our estate. It will be a period of significant transition McColl's trading update
“Continuing this momentum, this year we will significantly enhance our customer offer as we transition supply in over 1,300 stores to Morrisons and exclusively launch hundreds of new Safeway-branded products at McColl’s,” he added.
McColl’s is also planning to finish refurbishing 100 locations as part of its “refresh programme” this year and plans to buy up around 20 new stores.
The company said it was braced for a year of “significant transition”.
“2018 is a strategically important year for McColl’s as we move to new supply arrangements, and continue to grow and improve the quality of our estate.
“It will be a period of significant transition, however the actions we are taking will support our strategic objectives and deliver sustainable growth in the years ahead.”