McColl’s suffers from Palmer & Harvey insolvency fallout

Like-for-like sales in the 11 weeks to 11 February fell by 2.2 per cent

The convenience retailer acquired 298 stores during the financial year (McColl’s)

Shares in McColl’s fell sharply on Monday after the company admitted that disruption to its supply chain as a result of Palmer & Harvey going into administration had dented sales during the end of 2017 and early part of this year.

The convenience retailer said that despite putting a contingency plan in place, inking a short-term supply contract with Nisa in early December, and starting a new tobacco supply partnership with Morrisons earlier than previously expected, it had suffered a 2.2 per cent slide in like-for-like sales in the 11 weeks to 11 February.

It said that sales had been particularly held back by the performance in stores formerly supplied by Palmer & Harvey, which entered into administration on 28 November. Early on Monday, shares in McColl’s were down more than 10 per cent.

For the year ahead, however, the retail struck a more upbeat note and its full-year results for the year to 26 November 2017 were also robust.

It posted 4 per cent rise in pre-tax profit to £18.4m for the 52-week period. Total revenue over that time rose by 19.1 per cent to £1.13bn. And like-for-like sales rose by 0.1 per cent.

“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 £1bn in annual revenues for the first time we have demonstrated that this is now a business of real scale,” said chief executive Jonathan Miller.

The 298 stores that McColl’s acquired during the financial year helped it to expand its workforce by more than 3,000.

In January, McColl’s also launched its new Safeway range, of around 400 products to 102 stores, as part of a phased rollout, and it said on Monday that it was pleased with early customer reaction.

Over the coming year it said it plans to complete a further 100 convenience store refurbishments and intends to acquire around 20 new convenience stores.

“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,” the company said.

“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.”