McColl’s plummets 30pc after second profit alert
ConvenienCe store chain
McColl’s Retail Group has plummeted after issuing its second profit warning of the year.
Blaming supply chain issues and difficult trading conditions, McColl’s said like-for-like sales for the full year were down 1.4pc.
From September to november, the end of McColl’s financial year, total revenue was down 0.5pc. For the whole year it was up 8.3pc, but this was only due to it scooping up 298 Co-op shops.
McColl’s blamed the poor results on the collapse of its supplier, Palmer & Harvey, in november last year, as it had done in a previous profit warning in July.
Shares fell 29.8pc, or 35.4p, to 82.9p as the company said earnings for the full year will be around £35m, down from the £44m previously guided in July.
Russ Mould, investment director at AJ Bell, said: ‘That begs the question whether the dividend will also be cut at the end of the financial year.
‘The grocery industry is incredibly competitive and operators have to do everything they can in order to drive sales and keep costs under control.
‘Any slip-up can have disastrous consequences and put a business back both financially and strategically, and that’s exactly where McColl’s sits today.’
Palmer & Harvey’s collapse forced McColl’s to switch supplier to Morrisons faster than planned. The transition is done but the chain is still experiencing challenges.
McColl’s chief executive Jonathan Miller said: ‘We expect competition in the grocery retail sector to remain intense and we face into significant cost pressures.’ But things were looking up for companies on the FTSE 100, which rebounded 1.2pc, or 82.2 points, to 7062.4 points.
investors were feeling more chipper following the G20 summit, where President Trump and his Chinese counterpart Xi Jinping agreed to halt new trade tariffs for 90 days to allow for talks.
ed Park, deputy chief investment officer at Brooks Macdonald, said: ‘ This ceasefire means that the step-up in tariffs from 10pc to 25pc on $200bn of US imports from China pencilled in for the end of the year will be delayed at the very least, and this helps alleviate market fears of the trade war spiralling out of control.’
investors across the globe had worried that a US-China trade war could knock two of the world’s biggest economies, and send shockwaves through any companies which export goods to them.
Miners, which are susceptible to moves from China due to its massive appetite for metals, rallied following the weekend.
Antofagasta led the FTSe 100, up 7.9pc, or 62.8p, to 863.2p, while
Evraz climbed 7.6pc, or 34.7p, to 488.8p and Anglo American jumped 7pc, or 109.2p, to 1675.4p.
on the FSTe 250 index, homeware firm Dunelm shot up 14.1pc, or 76.5p, to 618.5p after an upgrade from Peel Hunt. Analysts at the broker said the business was ‘built on strong foundations’.
it doesn’t spend too much on rent compared to its sales, has earnings margins of more than 10pc and has low debt levels.
They recommended investors buy the stock, up from a ‘hold’ rating, and said the company’s focus on its core offering, improved branding and growing online performance should help it turn itself around following the distraction of the Worldstores acquisition.
But Stobart Group, owner of Southend Airport, slumped 11.7pc, or 23.2p, to 174.4p after revealing plans to slash its dividend and free up cash for expansion.
While bosses await a High Court judgement on a boardroom bustup, the firm revealed it plans to pay 1.5p per share as its fourth quarter dividend, down from 4.5p last year.