McColl’s still has more work to do to stabilise its business, according to Chief Executive Jonathan Miller (pictured).
Commenting on the retailer’s half-year results (26 weeks to 26 May 2019), Miller said McColl’s had made “good progress” in H1 following a challenging 2018, when the business struggled in the wake of supplier Palmer & Harvey’s collapse. He expected full-year results to be “broadly in line with expectations”.
His prediction came despite a highly competitive market with challenging trading conditions, which Miller ascribed to the usual fall guys of bad weather and an uncertain economic climate.
Total H1 revenue crept up 0.1% to £611.1m while like-for-like sales grew 1.0%, reversing a 1.4% drop across the whole of 2018. This was despite sales falling in May, as the UK experienced a prolonged period of poor weather compared to the start of last year’s long hot summer.
Profit before tax was £0.2m, considerably lower than 2018’s £2.3m, and took a hit from a decrease in gross margin which fell to 25.4% from 26.1% last year.
Margin was down principally as a result of higher cost prices following the transition to a new wholesale supply contract. It was also affected by the diluting effect of a stronger tobacco mix and softer sales of higher margin impulse lines, driven by the poor weather.
Investment in the McColl’s estate continued, with three new convenience stores opened and a further 17 refurbished. A total of 41 underperforming newsagents and smaller c-stores were shed over the period, while a trial of the ‘Morrisons Daily’ fascia commenced at 10 stores.
Optimisation of the estate will continue to be a priority over the next six months, along with strengthening the balance sheet, improving working capital, rebuilding gross margin and mitigating cost inflation.
