Mccoll’s profits halve as it takes £2.3m exceptional charge on Co-op purchase

● Interim earnings slide to £4.5m ● But warm weather boosts sales

Profits at convenience store chain Mccoll’s have almost halved after the company took a one-off financial hit from its acquisition of just under 300 Co-op stores late last year.

The exceptional charge of £2.3 million outweighed a boost to sales from warmer weather, the group – which includes the Glasgow-based RS Mccoll chain – said yesterday. Revenues rose 7.6 per cent to £504.8 million in the six months to 28 May, while same-floorspace sales lifted a much more modest 0.2 per cent.

Mccoll’s pre-tax profits plunged to £4.5m from £8.2m in the same period last year. However, the sales picture improved in the second quarter of the period, up 1.4 per cent supported by “favourable weather and our evolving mix of growth products”.

Like-for-like performance was stronger in recently converted outlets, with revenues up 2.8 per cent in the six month period and 3.8 per cent in Q2.

Chief executive Jonathan Miller said: “I am encouraged by the performance we have delivered over the first half of the year as our business has continued to gain momentum.

“We have traded well in a challenging environment, and also benefited from the recent hot weather, which has helped to drive sales in key growth categories including grocery and alcohol.

“We are delighted to have completed the integration of the acquired stores, on time and on budget.” Analysts believe the Co-op deal, which gives Mccoll’s an estate of about 1,300 shops, could drive a surge in earnings, but the latest results come against a backdrop of major consolidation in the grocery sector.

Tesco’s £3.7 billion takeover bid for Booker, the wholesale food and convenience store giant, is being studied by the Competition and Markets Authority (CMA), while there is speculation that Sainsbury’s may make a move on independent retail business Nisa.

However, Miller added: “As the wider convenience and wholesale sector evolves and continues to grow, Mccoll’s is in a strong position to benefit.

“We remain confident that our standing as a leading neighbourhood retailer will allow us to continue to achieve further progress against our strategy and deliver sustainable returns for shareholders.”

Miller said recently that he was also eyeing a possible takeover of Tesco’s One Stop chain. Analysts believe that Tesco will have to either offload its One Stop brand or hundreds of Tesco Express shops in order to secure clearance from the UK’S competition regulator for its merger with Booker.