Morrisons has confirmed the deal to sell 140 of its ‘M local’ convenience stores.
A team headed by retail entrepreneur Mike Greene, who has extensive experience in the convenience sector and has twice served as chairman for the Association of Convenience Stores, will be purchasing the stores for a consideration of £25m in cash.
Morrisons will retail only five M local stores, which are either on forecourts or will be converted into smaller Morrison’s supermarkets.
For many, the convenience sector has been a boon: the Co-Operative-Group attributes much of its recent recovery to the sector, which has experienced impressive growth recently with an average of two stores opening every day.
Morrisons’ fortunes in the sector have been less fortunate: the stores to be sold reported an operating loss of £36m in 2014/15. The supermarket giant announced a review of the M local business in March, which concluded that to reach profitability would require significant further investment in new sites, as well as additional capital expenditure and lease commitments.
On the company’s fortunes, Morrisons CEO David Potts, said: “Convenience is a large and growing channel in UK food retailing. Morrisons learnt much from its entry into the market, but M local was unable to scale.”
The Board has indicated that the sale of the M Local stores will enable Morrisons to focus future investment on its core supermarkets.
The company expects to incur a loss on disposal of around £30m in the deal.