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Retail

'Strategic Importance' Of Neighbourhood Stores Remains Strong, Says McColl's CEO

The "strategic importance" of local and neighbourhood stores "has never been greater", particularly as COVID-related challenges continue, the chief executive of UK convenience operator McColl's has said.

Jonathan Miller was commenting as McColl's reported full-year revenue of £1.26 billion (€1.48 billion), up 3.2% on the previous year, reflecting 'strong demand' in its stores due to the coronavirus crisis.

Like-for-like sales were up 12.0%, it added, with good performances in the alcohol, fresh food and tobacco categories, while gross margin was 23.9%.

McColl's saw a 'change of product mix as a result of changing shopping behaviours during the pandemic, as customers moved away from impulse purchases to lower margin take home products as well as multi-buys and value items,' it said in a statement.

Store Optimisation

The group's positive performance was partially offset, however, by store divestments and closures in keeping with its store optimisation programme.

Adjusted EBITDA fell to £29.1 million (from £32.1 million the previous year, while adjusted profit before tax was £1.1 million (compared to £7.4 million in full-year 2019).

"Over the last 12 months we have seen strong like-for-like sales growth, driven by the positioning of our stores in key neighbourhood locations and our strong customer offer," said Miller. "Despite the operational challenges of the pandemic, we have made good progress on our customer-focused strategic change programme.

"Looking ahead to 2021, whilst uncertainties and restrictions remain, there is no doubt that the strategic importance of neighbourhood stores has never been greater, and we are well positioned to deliver for customers and shareholders, as we continue to enhance our convenience offer."

Morrisons Supply Deal

McColl's recently announced an extension of its wholesale partnership with Morrisons for a further three years, to 2027, which will see an acceleration of the successful Morrisons Daily format.

According to McColls, the partnership with Morrisons marks a 'significant milestone' in its goal to become a food-led convenience retailer.

It has also extended its bank facility to February 2024, with 'more flexible terms to execute strategy, including additional headroom and a realigned amortisation schedule', it said.

"I am delighted with the opportunity this brings to convert 300 stores to the successful Morrisons Daily format over the next three years," said Miller. "These stores will be particularly well suited to the changing customer dynamics that are resulting from the pandemic."

In terms of the group's performance as lockdown measures begin to ease, McColl's added that it expects its sales mix to 'normalise' going forward, with higher sales of impulse products and a 'progressive reversion' towards pre-pandemic margins.

© 2021 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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