McColl’s warns on profits as it continues to suffer from Palmer & Harvey collapse

McColl's update

McColl’s has warned that its earnings are due to come well below previous estimates as last year’s collapse of supplier Palmer & Harvey took its toll.

In a trading update this morning, the convenience retailer cautioned that its full year adjusted earnings would come in at £35 million, down 20 per cent from previous estimates of £44 million.

This comes as it reported a 0.5 per cent drop in total revenues for its fourth quarter, alongside a like-for-like sale dip of 1.4 per cent.

It attributed this drop to “significant supply chain disruption” after the collapse of Palmer & Harvey last year, which left £700 million worth of debts in its wake.

In August, McColl’s completed the transition to be supplied by Morrisons in 1300 of its stores ahead of schedule, but it said that the collapse also “severely disrupted” its plans to resurrect the Safeway brand with the grocer.

“Following the collapse of Palmer & Harvey, we have experienced significant supply chain disruption and have needed to accelerate the rollout of Morrisons supply to 1300 of our stores,” the convenience retailer said.

“The speed of this transition has created significant challenges and severely disrupted our plans for the launch of Safeway.”

McColl’s chief executive Jonathan Miller added: “2018 has been a very difficult year for the business, marked by unprecedented supply chain disruption and ongoing challenges.

“Looking ahead, we expect competition in the grocery retail sector to remain intense and we face into significant cost pressures.

“Important to our future success will be continuing to develop our partnership with Morrisons, alongside our plans to enhance our neighbourhood convenience offer by improving the quality of our estate and our overall customer experience.”

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