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Potential Morrison Daily conversions to over 700 stores.

Currently converting stores with as little as 1,000sq ft.

McColl's have 290 stores with less than 1,000sq ft.

Conversions with largest sq ft seem to have the least percentage revenue uplift.

Conversions seem to be trying to gear themselves more towards the female shopper and higher socio-economic shopper.

1.8 years pay back and £45k EBITDA uplift on converted stores.

West Midlands stores seem to be the only ones that are still continuing to have supply chain issues.

Stocking Safeway products is not a conversion, it is a change in whole sale supplier to Morrisons which happened circa 2 1/2 years ago and a year ago for McColl's ex-Coop stores.

I've just been looking at the feedback people are leaving when it comes to Morrisons Daily's and on the whole many say that they are expensive.

Where my parents live there is a Waitrose and across the road is a Spar. On many products, often the Spar is as much as 20% more expensive then the Waitrose for exactly the same products. The only reason why I can see the Spar doesn't go under is that it opens 1 hour earlier than the Waitrose and closes 2 hours later.

What have I managed to glean when it comes to the stores that have been converted into Morrison's Daily's.

1. As far as I can see, so far none of McColl's stores in Scotland have been converted.

2. 152 stores have been converted (this information has a circa 3 week lag time, therefore can add around an addition 18 stores to this number to get a more accurate up to date number) with the stores in the Midland's and North West seem to have been given priority in the number of conversions so far. While McColl's stores in the South West, Wales and East Anglia, very, very few have been converted so far - in other words seems to be high population density areas being prioritised over the low population density areas.

3. Stores that have been converted seem to be far better stocked than stores that are still to be converted or other McColl's stores that are selling Safeway products. Therefore it seems to me that Morrison's are giving Morrisons Daily Fascia stores priority over other stores Morrisons are the whole sale supplier to.

4. Friendly staff.

Negatives seem to be:

1. They are expensive.

2. Since being converted some of the stores are closing a couple of hours earlier then they did when McColl's own branded stores.

I've noticed on the last few stores McColl's have up for sale but are not under offer they have reduced the price on them again to try and get them away.

It looks like McColl's have divested themselves of a further 16 stores since I last posted giving numbers just over a week ago.

This means that for the month of November alone McColl's have divested 30 stores bringing the total for the year so far to 95 stores being divested.

As I posted just over a week ago it seems to me that McColl's management are really getting a shift on to get their store optimisation plan done and dusted by years end. Also by this time next year McColl's will have converted at least 450, 40% of their stores to Morrison Daily's - If this isn't management doing things fast enough to turn McColl's round then I don't know what is...

McColl's management have divested over 250 stores over the past two years, now that's some going!

When McColl's IPO in 2014, they're more or less a newsagents come Arkwrights corner shop, shop portfolio company leaving the management a herculean task of bringing the company into the 21st century.

It seems to me when the management started the whole process of modernising McColl's they didn't realise at first how quickly this turning around had to be done.

My main criticism of the management is that they didn't go for a rights issue when the share price was over 200p. If they had done so would easily have been able to raise double the amount, £70mln compared to the finance raising they did a couple of months ago. This would have left McColl's in a far better financial position then it is to day.

It looks like maybe Laxey have increased their holding by 670,000 shares as they already had a holding of a little of 4.7%

Is McColl's the next Woolies or the next Next???

Both the brokers reports I've read seem on the whole positive about McColl's in the coming years after the Morrison Daily roll outs.

Analyst Matthew McEachran, at the group’s brokers Singer Capital Markets, is estimating that the current year to the end of this month will see revenues of £1.13bn (£1.24bn) while showing a loss of £8.1m (£1.4m profit).

For the next year he sees sales of £1.19bn then up to £1.27bn in 2023, with a £1.2m profit in 2022 then a £8.6m profit in 2023.

Those estimates would see 0.3p of earnings in the next year, then up to 2.4p per share by 2023.

I understand that the One Stop Shop convenience store brand of Tesco is highly profitable, so why also can't also McColl's be?

Last week I posted "In the past 7 days McColl's have divested themselves of a further 3 stores (14 so far in November and 79 for the year) leaving them with a current portfolio of just 1,183 stores."

It seems to me that McColl's have divested themselves of another 5 stores since my previous post (19 so far in November and 84 for the year) and therefore it seems to me that McColl's are doing their very best to get their store optimisation plan done and dusted by years end.

In the past 7 days McColl's have divested themselves of a further 3 stores (14 so far in November and 79 for the year) leaving them with a current portfolio of just 1,183 stores.

Of the remaining to be divested only 11 are up for sale and not under offer which is down 4 over the past month with the rest being Under Offer.

Most probably Stockopedia are still calculating McColl's market cap from the number of shares in issue before the Rights Issue therefore coming out with a lower market cap..

Peel Hunt has encouraged investors in convenience store chain McColl’s Retail Group (MCLS) to ‘keep faith with the shares’ despite supply chain issues.

Analyst Jonathan Pritchard retained his ‘buy’ recommendation and target price of 40p on the stock, which closed down 17%, or 3p, at 15p after warning that product shortages would affect profits.

Pritchard said there was ‘no problem with footfall but product shortages mean the sales and margins are under great pressure’, as he downgraded earnings by 16% for this year and 10% for next year.

However, he highlighted the rollout of Morrisons Daily stores – in which McColl’s will rebrand hundreds of its stores – and the strength of performance at those outlets already up and running.

‘It is clear that the shares are not going to enjoy the downgrades but the underlying news on M Daily should offer some backup,’ he said.

‘We continue to believe that in time, the chain will look completely different and would keep faith with the shares. We would be buyers in weakness, as the M Daily transformation is what investors signed up for, and that is what will ultimately be a major positive.’

Morrisons must ensure McColl’s availability woes are a blip if it is to succeed as a supplier as they are clearly looking to court more independent retailers to switch to its wholesale supply arm.

Nick Bubb, an independent retail analyst, suggested other grocery businesses did not appear to be experiencing these issues as much as McColl’s, which had this year called on investors to help revive the business.

Bubb said: “McColl’s Morrisons Daily stores continue to deliver strong performance post-rollout, fortunately, and the company’s banks remain ‘supportive’, but shareholders who stumped up £30m-£35m in emergency funding back in August may not be so happy.”

Big supermarkets, including Tesco and Sainsbury’s, have recently reported rising sales despite acknowledging supply chain problems. This year the industry has seen a consumer shift back towards shopping in large supermarkets and away from convenience shops, which had benefited last year during lockdowns when many families chose to buy food close to home.

Crisps, beers, wines and spirits – were among the products hit hardest by the supply chain crisis.

For McColl's non-Morrison Daily's this accounts for over 20% of sales.

Independents now starting to convert to Morrison Daily's - Harj Dhasee to convert independent convenience stores to Morrisons Daily format.

Gloucester retailer Harj Dhasee is to switch to the Morrisons Daily format, making him the first independent retailer to operate under this model.

The stores are due to switch over around Christmas with the new model fully in place by the end of January.

Morrisons has a stronger own label range offering that I can provide to my customers. I’m really excited to be able to be at the forefront of helping shape the future of Morrisons wholesale into the independent sector.”

Harj said the Morrisons approach suits how he works as well. “They’re very much up for working around the retailer in terms of what they need and what they want. Buying is with them ordering is via them however it’s a pull model rather than a push model, which is very appealing. So we can pull as much or as little as we like. We can use all of our local knowledge, understanding customers, and then we just implement the Morrisons’ strategy on top of it.

While Harj is the first independent retailer to sign up to this model, he expects others to join him soon. “It won’t work for every retailer but there’s been a lot of interest already from others.”

2021 state of play when it comes to McColl's store optimization plan - targeting estate of 1,150 stores:

Number of stores divested, either leases sold or closed when lease expires or break clause in lease reached:

Jan - 9
Feb - 7
Mar - 8
Apr - 6
May - 6
Jun - 10
Jul - 4
Aug - 5
Sep - 6
Oct - 4
First week of November - 11

Total number of stores divested in first 10 months & 1 week of 2021 is 76.

Total number of stores in portfolio 1,186 - 24 Under Offer = 1,162 - 12 up for sale and not under offer = 1,150.

It seems to me by the end of the year McColl's store optimization plan will be all but complete as many of the stores that are currently under offer will have been sold.

sp - I doubt it very much. I can recall with my own broker putting a limit price of a particular number of shares to buy. This order was fulfilled through 5 buys over the day.

McColl’s has linked up with technology firm Ecrebo to start using a receipt system which can add personalised offers and messages to customers as they make purchases.

Richard Crampton, McColl’s chief commercial officer, said: “The importance of the local McColl’s store for our customers has never been clearer.

“Our partnership with Ecrebo is all about better understanding their needs so we can provide a more tailored and relevant shopping experience, rewarding them with offers that are tailored to their shopping in real-time.

“Ecrebo’s software enables us to reach every shopper with bespoke savings whilst giving us the flexibility to target coupons to specific stores or product categories across the estate.”

David Buckingham, chief executive at at Ecrebo, said: “McColl’s customers will receive regular, relevant targeted offers to encourage them back in, to buy the things they want and need from their local store.