Mccoll’s shares slide as profit halved
Worst upheaval in decades after failure of Palmer & Harvey led to managers driving delivery trucks
SHARES in Mccoll’s have crashed after an “unprecedented” level of disruption triggered by the collapse of Palmer & Harvey caused the convenience chain’s profits to halve.
Pre-tax profits slumped 49pc to £2.3m for the 26 weeks to May 27, as sales at 700 stores suffered when the wholesaler plunged into administration last November. Investors sent shares down 14pc to 181p, cutting Mc- Coll’s market value by £33m to £209m.
Chief executive Jonathan Miller said the upheaval was the worst he had seen in his 30 years in convenience retailing, but he backed Mccoll’s to regain “momentum” after a replacement supply deal with Morrisons.
He said: “It has been a tough first half because of the impact of the supply chain disruption, but that is behind us now and we start to look forward and get some positive momentum back into the business.
“We have lots of opportunities from refreshing stores, to rolling out the Safeway offer, so we are very confident about the future.”
Like-for-like sales, which strip out new stores, dropped 2.7pc for the period following P&H’S demise and the harsh weather conditions from the Beast from the East.
P&H was the UK’S largest tobacco supplier before it succumbed to a £700m debt pile, strain on its cash flow and a failure to secure extra financing.
During the height of the disruption, Mccoll’s head office staff and area managers were forced to drive delivery trucks to stores to ensure the shelves remained stocked.
Mccoll’s said a supply deal with Morrisons to replace P&H had been rolled out to more than 1,000 shops, giving customers exclusive access to around 400 Safeway products.
It expects 1,300 stores in the Mccoll’s estate to be transitioned to Morrisons supply by early August.
Mr Miller added: “We will … have a progressively stronger and simpler operational position with a more compelling offer as we move through the second half and into 2019.”
While profits suffered, the integration of the 300 stores snapped up from the Co-operative Group last year helped half-year revenues climb 19pc to £601.7m.
The business also bought three convenience stores during the period and revamped 27 sites.
“The convenience market is very fragmented,” Mr Miller added. “There are something like 50,000 convenience stores in the UK and two thirds of those are still independently owned and operated. That is the target market for our acquisitions.”
The company said sales picked up at the start of the second half of the year as supply pressures eased and the weather improved.
Mccoll’s also confirmed that its chief financial officer Simon Fuller was leaving to take up the same role at Reach.