UK convenience retailer McColl's Retail Group has reported a 1% like-for-like sales growth in the first half of its financial year against a strong comparative period last year and a two-year like-for-like sales growth of 7.4%.
In this period, total revenue declined 5.3% to £572.7 million, from £604.8 million in 2020, principally reflecting store closures.
McColl's closed 43 sites in the first half as part of its store optimisation programme.
Adjusted EBITDA declined to £24.3 million due to lower gross profit and ongoing expenditure due to COVID-19.
Gross profit for the period amounted to £134.3 million, down 10.9% compared to the same period last year.
The gross profit margin was down to 23.5% due to the changing mix of sales as customers moved away from higher-margin impulse purchases to lower margin take-home products, as well as multi-buys and value items.
'Serving Local Neighbourhoods'
Jonathan Miller, chief executive of McColl's, said, "We have continued to play an important role serving local neighbourhoods through the challenges of COVID-19, sustaining like-for-like sales growth despite the strong prior-year comparator in Q2 following the first national lockdown.
"Many of the changes in consumer behaviour we have seen since the onset of the pandemic have continued in 2021, with customers spending less on impulse goods, but buying more take-home and multipack products, impacting overall margins. Alongside the impact that the industry-wide shortage of delivery drivers has had on our product availability, we are confident that these temporary trading effects will reverse as restrictions ease and distribution returns to normal."
The company added that it continued to make progress against its customer-focused strategic change programme, including the rollout of Morrisons Daily stores.
The company converted 25 new Morrisons Daily outlets in the first half, taking the total number of operational Morrisons Daily stores to 56.
It is also progressing on its partnership with Uber Eats across 400 stores and is testing the service in Morrisons Daily stores.
McColl's said it was optimistic about the future but warned that full-year performance could fall short of management expectations, if trading conditions did not improve in the second half of the financial year.
In recent months, its revenues were impacted by availability issues due to supply chain disruption resulting from the shortage of delivery drivers.
However, the company noted that it is witnessing a stabilisation in underlying gross margin trends as customers return to pre-pandemic buying patterns, including more frequent store visits with smaller basket sizes and increased sales of higher-margin impulse products.
Miller explained, "Looking ahead, whilst the wider economic outlook remains uncertain, we have clear demand for our grocery-led convenience offer, and our focus in the second half will firmly be on the continued roll-out of the Morrisons Daily stores, to help drive sustainable, profitable growth over the medium term."