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Convenience retailer McColl’s (MCLS) shares plummeted 23% after it issued a profit warning, having had to accelerate the rollout of its Morrisons supply contract following the collapse of Palmer & Harvey..
The listed chain added that difficult trading conditions had impacted profitability, as it forecast core earnings of £35m for the year ended 25 November, with “no more than a modest improvement” on the previous year.
McColls’ annual like-for-like sales slumped 1.4%, despite an improvement in sales in the fourth quarter, driven by tobacco.
Total sales for the most recent period fell 0.5%, although like-for-like sales improved to become flat against 2017’s figures.
Despite an improvements in sales, the accelerated rollout of Morrisons products to 1,300 stores, following the collapse of Palmer & Harvey, created “significant challenges and severely disrupted plans for the launch of Safeway”.
The company added that it has entered “revised banking arrangements”, which will provide “additional flexibility”.
McColl’s expects “continued uncertainty for customers” and will require competitive pricing, it said, while it looks to improve efficiency through investment in systems.
During the year, the chain completed 59 convenience store refreshes, and acquired another 11 sites, while 66 under-performing stores were “removed”.
Net debt will be “materially lower than expected” at around £100m, the retailer added in its trading update.
“2018 has been a very difficult year for the business, marked by unprecedented supply chain disruption and ongoing challenges,” commented chief executive Jonathan Miller.
“I am, however, extremely grateful for the continued hard work of all my colleagues and the ongoing support of Morrisons.
“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.”
McColl’s shares plummeted 23.7% to 90.6p in early trading after the damaging profit warning.
Morning update
Collapsed butcher’s chain Crawshaw Group (CRAW) has sold its remaining stores to newly-formed company Loughanure, saving 240 jobs.
The AIM-listed meat retailer, immediately closed 35 stores after entering administration last month, but the rescue deal will save its 19 remaining sites.
Loughanure was incorporated on 22 November for the purpose of saving the remaining portfolio, and is led by Thomas Cribbin, who founded Northern Irish butchers chain Cribbin Family Butchers, and Gabbotts Farm, which he sold to Crawshaw in 2015.
A sale process which involved more than 50 expressions of interest, resulted in Loughanure buying the remaining profitable stores for around £1.4m.
Shares in the AIM-listed chain were suspended on 31 October after Crawshaws announced it had not been able to raise the funding needed to restructure the business and had decided to appoint administrators. It had been under increasing pressure from supermarket and discounter competition in recent years.
Former Asda meat executive Jim Viggars was appointed as Crawshaws CEO in May. However, he was unable to turn the fortunes of the business around, with the company issuing profit warning in August as like-for-like sales fell 1.32% during the first 20 weeks of its financial year.
After entering administration, the company had its shares on the AIM-index suspended, and is expected to see its listing cancelled after deciding not to appoint a nominated advisor.
A trade truce between Trump and President Xi has led to a positive start this morning, with the FTSE 100 surging 2.2% to 7,134pts.
The early risers include Purecircle Limited (PURE), up 5.3% to 308.5p, Majestic Wine (WINE), up 4.1% to 298.9p, and Premier foods (PFD), up 4.1% to 37.2p.
The early fallers include Stobart Group (STOB), own 4.1% to 189.4p, RPC Group (RPC), down 2.9% to 695.6p, and Stock Spirit Group (STCK), down 1.9% to 188p.
This week in the city
With a parliamentary vote on Brexit due on 11 December, the impact of Brexit will continue to be in focus for the rest of the week.
Greencore (GNC), which admitted plans to stockpile non-fresh items to The Grocer, will announce its full year results on Tuesday. The sandwich and food-to-go specialist will hoping to show investors it is strengthening on the back of the sale of its US business, which it announced last month.
Aim-listed booze supplier Stock Spirit Group (STCK) will reveal its full year figures on Wednesday morning.
Across the Atlantic, on Wednesday, wholesale giant Costco will reveal its current state of affairs with its sales figures for November.
FTSE 100-listed packaging giant DS Smith will update investors with its quarterly results in a trading update on Thursday.
The same day, Ocado partner and US supermarket group Kroger will reveal its results for the third quarter.
On Friday, sugar giant Associated British Foods (ABF) will be hosting its annual general meeting.
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