McColl’s Retail Group (MCLS) ’gained momentum’ in the first half as it integrated the acquired 298 Co-op convenience stores and recorded strong sales growth.

Total sales jumped 7.6% to £504.8m during the six months to 28 May as the group benefitted from the integration of stores acquired from The Co-op, around two thirds of which were trading at the half-year and all by the end of July.

Like-for-like sales for the year edged up 0.2% in the first half, with like for like sales up 1.4% in the second quarter after being boosted by favourable weather and its evolving mix of growth products.

Like-for-like sales in recently acquired and newly converted stores were up 2.8% in the half-year period and 3.8% in the second quarter.

Gross margin improved by 90bp to 25.4%, while adjusted EBITDA increased to £16.5m from £16m last year, despite being impacted by £1.3m pre-opening costs relating to the acquisition

Profit before tax dropped from £8.2m to £4.5m after being hit by £2.3m of exceptional costs and £1.3m of pre-opening costs.

Net debt more than doubled to £110.8m from £42.3m, but McColl’s remains “comfortable that this debt profile is in line with previously described expectations”.

Shares are currently down 0.5% to 207p in late afternoon trading.

CEO Jonathan Miller said: “I am encouraged by the performance we have delivered over the first half of the year as our business has continued to gain momentum. We have traded well in a challenging environment and also benefited from the recent hot weather, which has helped to drive sales in key growth categories including grocery and alcohol.

“We are delighted to have completed the integration of the acquired stores, on time and on budget. We have welcomed over 3,500 new colleagues who have done a great job in supporting customers through the transition, and early trading is in line with our expectations. With all 298 stores now on board, they are expected to make a material contribution to sales and profit in the second half of the year and beyond.

“Our focus remains on enhancing our convenience proposition through growing market share, developing our product ranges and delivering excellent customer service.

“As the wider convenience and wholesale sector evolves and continues to grow, McColl’s is in a strong position to benefit. We remain confident that our standing as a leading neighbourhood retailer will allow us to continue to achieve further progress against our strategy and deliver sustainable returns for shareholders.”

Topics