Morrisons will have to pay an eight-figure sum in order to sell its convenience subsidiary M Local because of a parent company lease on its properties across Britain, theguardian.com reports.
In theory, the liability the retail chain will have to pay could reach £100 million. The business, a relic of ex-CEO Dalton Philips’s tenure, is regarded almost universally as an expensive failure, or, as Shore Capital analyst Clive Black termed it, demonstrative of “conceptual naivety” on the part of the grocer.
“Morrisons had to contend with what were in effect poorly acquired and inferior sites, which has already led management to close 23 outlets that were materially under-performing,” he stated.
“Whilst relevant to a degree we were tearing our hair out under the prior regime when Morrisons blamed its poor relative performance on a lack of exposure to online and convenience stores. If Morrisons had over-worried about its superstores then we do not believe it would have blown hundreds of millions of pounds on Kiddicare, under-performing convenience stores or its tie-up with Ocado [to deliver online shopping], and its core would be in better shape.”
© 2015 European Supermarket Magazine – your source for the latest retail news. Article by Peter Donnelly. To subscribe to ESM: The European Supermarket Magazine, click here.