Daily Mail

McColl’s plum­mets 30pc af­ter sec­ond profit alert

- By Lucy White

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.

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