Mixed results in McColl’s interim results as CFO resigns

McColl's update

Convenience store retailer McColl’s attributed “one of the most challenging” half-year periods for its mixed interim report, which also announced the resignation of chief financial officer Simon Fuller.

For the 26-week period ending May 27, McColl’s total revenue increased 19.2 per cent year-on-year to £601.7 million, driven by the 2017 acquisition of around 300 Co-op stores.

However, like-for-like sales were down 2.7 per cent during the period, which McColl’s blamed on the supply chain disruption after Palmer & Harvey.

Adjusted EBITDA was also slightly down, coming in at £16 million compared to £16.5 million the same half-year period in 2017.

Additionally, gross margin was slightly down at 25 per cent compared to 25.4 per cent recorded last year, which was also affected by the P&H supply chain disruption.

On the other hand, McColl’s profit before tax was £2.3 million, a significant drop compared to the £4.5 million recorded during the same period in 2017.

The retailer said this followed £3.5 million of downward adjusting items, an increase on the £2.3 million recorded in 2017, and £2.4 million of property profits, also a vast improvement to the no property profit made in 2017.

McColl’s said basic earnings per share fell to 1.3p compared to 2.8p in 2017, but adjusted earnings per share which includes the benefit of property profits were 4.7p compared to 2017’s 5p.

Net debt increased slightly year-on-year from £110.8 million to £112.6 million, which the retailer said was ahead of expectations due to strong cash performance.

Finally, interim dividend per share was maintained at 3.4p and the retailer now expects the 2018 full year adjusted EBITDA to be at a similar level to the prior year.

McColl’s chief executive Jonathan Miller said he was “incredibly proud” of the results given that it was “one of the most challenging six months” the retailer had ever faced.

“During the first half we experienced unprecedented supply chain disruption following the collapse of P&H last November,” he said.

“This temporary upheaval has inevitably impacted sales and margin performance in the c.700 stores that were formerly supplied by P&H, and has also had knock-on effects on the rest of the estate.

“However, the switch to Morrisons supply in the 1300 stores intended for this year has been accelerated, and will now be completed in early August, ahead of schedule.

“At the same time we have relaunched the Safeway brand at McColl’s, providing our customers with a more competitive and higher quality food offer.

“We will therefore have a progressively stronger and simpler operational position with a more compelling offer as we move through the second half and into 2019.”

He added: “As the convenience sector continues to grow, we remain confident that our clear strategy will allow us to make further progress and deliver sustainable returns for shareholders.”

McColl’s also used its interim results to announce the resignation of chief financial officer Simon Fuller, who is moving on to take up a similar role at Daily Mirror parent company Reach.

The board said it would begin a process to identify a permanent successor without delay, and that Fuller would remain at McColl’s in his current role until a replacement has been appointed and a handover takes place.

Fuller’s exact departure day will be announced once confirmed.

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