Last checked at 17 Nov 2021 07:00
17 November 2021
McColl's Retail Group plc
TRADING UPDATE
· Continued supply chain disruption impacts revenues in Q4
· Strong performance from Morrisons Daily format leads to accelerated roll out with over 150 stores expected by end of November 2021
McColl's Retail Group ("McColl's" or "the Group") today issues an update on trading.
Current trading
At the Group's Interim Results on 12 August 2021, we announced that supply chain disruption had impacted product availability in stores with a consequential effect on revenues, and that if these issues did not materially improve in the second half, our full-year performance may fall short of Board expectations.
As has been well publicised, external factors, including the ongoing nationwide shortage of delivery drivers, labour shortages at distribution centres and insufficient supply of key products, including high margin branded impulse lines, continue to impact the supply chain nationwide and have intensified in the fourth quarter.
While we continue to work collaboratively with our wholesale partner, Morrisons, to lessen the effect of the disruption, we have been unable to fully mitigate the impact to stores, leading to significantly lower revenues than initially anticipated. FY21 adjusted EBITDA pre IFRS 16 is now expected to be in the range of £20m to £22m. The Group continues to monitor the situation with its key stakeholders, including its lending banks, who remain supportive.
Morrisons Daily conversions ahead of schedule
Our Morrisons Daily stores continue to deliver strong performance, with revenue growth significantly ahead of the rest of the estate, driven by a high grocery mix and wider product choice for customers. The format allows us to grow customer spend, frequency and loyalty by growing the basket size, offering customers access to great value fresh food, under the Morrisons fascia, in their local community.
At our capital raise we indicated a 2-3 year payback on investment. Early indications point to a return towards the shorter end of this range. This factor, combined with an increase in operational capability, is leading to an acceleration of Morrisons Daily deployment.
On 12 October 2021, we announced the opening of our 100th Morrisons Daily, implementing six store conversions per week. The pace has since accelerated, and we now expect to reach over 150 Morrisons Daily stores in operation by the end of November 2021. At this pace, we anticipate reaching our targeted number of 350 conversions well ahead of our original date of November 2022.
Jonathan Miller, Chief Executive of McColl's, said: "It is disappointing to see supply chain issues worsen through the second half, but external factors have not eased, and continue to impact much of the UK economy. We are working collaboratively with our wholesale partner Morrisons to restore in-store product availability as quickly as possible.
"Despite these supply chain issues, I am delighted by the step change we are witnessing in store performance from our Morrisons Daily conversions. This new format is showing strong sales growth and is delivering better ROI than we expected. Our conversion programme is moving at pace, ahead of time and on budget, and we anticipate reaching 350 Morrisons Daily stores well in advance of our original target.
"I would like to thank our 16,000 colleagues who are working tirelessly to restore product availability to normal levels across our estate so that we can continue to serve our local communities to the very best of our abilities every single day."
Forthcoming announcement date
McColl's expects to publish a full-year trading update for the 52 weeks to 28 November 2021 on 8 December 2021.
Enquiries
Please visit www.mccollsplc.co.uk or for further information, please contact:
Analyst & Investors: | Tej Randhawa, McColl's
| +44 (0)1277 372916 |
Media: | Ed Young, Headland Rob Walker, Headland Charlie Twigg, Headland | +44 (0)203 805 4822 mccolls@headlandconsultancy.com |
Notes to editors
McColl's is a leading community retailer, with an estate of over 1,200 managed convenience stores and newsagents. We operate McColl's and Morrisons Daily 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.
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014
LEI: 213800R1TLR536P8YJ67