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3 Dec 2018 07:00
McColl's Retail Group
Q4 and Full Year Trading Update
McColl's Retail Group plc, the convenience retailer, ("McColl's" or "the Group") today announces its trading update for the 13 and 52 week periods ended 25 November 2018.
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014
Financial and operational highlights:
Total revenue down (0.5)% in Q4; up 8.3% for the full-year reflecting the annualisation of the 2017 acquisitionTotal like-for-like (LFL)1 sales flat at 0.0% in Q4, an improvement on Q3 supported by a strong performance in tobacco; with full-year LFL sales down (1.4)% 59 convenience store refreshes completed in the year, delivering average sales uplifts above 5%11 new convenience stores acquired in 2018Continuation of estate optimisation programme with 66 under-performing newsagents and smaller convenience stores removed in the yearFurther sale and leaseback transactions completed in Q4 generating full-year cash proceeds of £25m and significant profits on disposalYear-end net debt materially lower than expected at around £100mIn light of transitional challenges and continued difficult trading conditions, adjusted EBITDA for FY18 now expected to be around £35m
Outlook
It the last 12 months, following the collapse of Palmer & Harvey, we have experienced significant supply chain disruption and have needed to accelerate the rollout of Morrisons supply to 1,300 of our stores. The speed of this transition has created significant challenges and severely disrupted our plans for the launch of Safeway. We are extremely grateful for Morrisons' support during this period, and whilst the transition is now complete, we are continuing to experience a number of challenges. We are working together to address these issues and to develop an optimal range and promotional offer for the future.
In addition, a stronger performance in tobacco, relative to other categories, has resulted in a lower conversion of sales to profit than anticipated. As a result, we now expect adjusted EBITDA for FY18 to be around £35m.
We are pleased, however, to confirm that we have significantly reduced net debt, to a level lower than previously expected. We have also entered into revised banking arrangements. Whilst our existing financing is in place until mid-2021, a number of changes have been made to the terms to give us additional flexibility to execute our strategy.
The Board remains committed to the long-term strategy for the Group and the opportunities this will bring. We will continue to develop our convenience offer, supported by our store refresh programme; focus on customer service; and increase our neighbourhood presence.
In the short term, managing cost pressures will continue to be critical, the most significant being an increase in the National Living Wage. To improve efficiency we are investing in systems and processes, alongside our programme of estate optimisation. We also expect continued uncertainty for consumers which will require us to demonstrate further competitive retail pricing. As a result we now expect adjusted EBITDA for FY19 to be no more than a modest improvement on FY18.
Preliminary Results for the 52-week period ended 25 November 2018 will be released on 18 February 2019.
Jonathan Miller, Chief Executive, said:
"2018 has been a very difficult year for the business, marked by unprecedented supply chain disruption and ongoing challenges. I am, however, extremely grateful for the continued hard work of all my colleagues and the ongoing support of Morrisons.
"Looking ahead, we expect competition in the grocery retail sector to remain intense and we face into significant cost pressures. Important to our future success will be continuing to develop our partnership with Morrisons, alongside our plans to enhance our neighbourhood convenience offer by improving the quality of our estate and our overall customer experience."
[1] Like-for-like sales reflect sales from stores that have traded throughout the current and prior financial periods, and sales include VAT but exclude sales of fuel, lottery, mobile phone top up and travel tickets.
Enquiries
Please visit www.mccollsplc.co.uk or for further information, please contact:
McColl's Retail Group plc Jonathan Miller, Chief Executive Simon Fuller, Chief Financial Officer Naomi Kissman, Head of Investor Relations +44 (0)1277 372916 | Media enquiries: Headland Lucy Legh, Rob Walker, Charlie Twigg +44 (0)20 3805 4822
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Notes to editors
McColl's is a leading neighbourhood retailer, with an estate of 1,556 managed convenience stores and newsagents. We operate McColl's branded convenience stores as well as newsagents branded Martin's across the UK, except in Scotland where we operate under our heritage brand, RS McColl. Our dedicated colleagues serve five million customers every week, and we are the largest operator of Post Offices in the UK, with c.600 in-store counters/branches.
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