McColl's like-for-like sales fall following Palmer & Harvey collapse
McColl’s has reported a drop in first half like-for-like sales after facing one of its most challenging six-month trading periods.
In the half year to 27 May total revenue climbed by 19.2% to £601.7 million after the retailer acquired 300 new convenience stores in 2017.
However, like-for-like sales were down 2.7% due to stock availability being impacted by supply chain disruption following the failure of wholesaler Palmer & Harvey. This meant a planned supply switch to Morrisons in the 1,300 stores intended for this year had to be accelerated and will now be completed ahead of schedule in August.
Pre-tax profit was £2.3 million compared to £4.5 million in the same period in the previous year following £3.5 million of downward adjusting items and £2.4 million of property profits.
Jonathan Miller, McColl’s chief executive, said: “I am incredibly proud of our team and the extraordinary efforts they have shown in dealing with one of the most challenging six months the business has ever faced. During the first half we experienced unprecedented supply chain disruption following the collapse of P&H last November. This temporary upheaval has inevitably impacted sales and margin performance in the c.700 stores that were formerly supplied by P&H and has also had knock-on effects on the rest of the estate.”
During the period, the company relaunched the Safeway brand at McColl’s to give customers a “more competitive and higher quality” food offer. It also made good progress towards making grocery its biggest sales category, which now represents 33% of sales.
The company said its sales performance had improved in the early part of the second half as it recovered from the supply disruption and benefited from better weather. Total like-for-like sales for the seven-week period ending 15 July were down 0.8%.
Due to the challenges faced in the first half, McColl’s now expects its 2018 full year adjusted EBITDA to be at a similar level to the prior year.
Miller added: “As the convenience sector continues to grow, we remain confident that our clear strategy will allow us to make further progress and deliver sustainable returns for shareholders.”
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