Shares in retail group McColl’s fall 16% on supply chain disruption

Shares in convenience store chain McColl’s fell 16 per cent on Monday to their lowest point in 18 months, after the group reported lower sales following the collapse of one if its suppliers last year.

McColl’s reported that like-for-like sales were down 3 per cent in the six months to May as a result of supply chain disruption caused by the failure of wholesaler Palmer & Harvey. The group’s gross margin was also affected by the disruption, while profit before tax was down 49 per cent compared to the same period last year.

“I am incredibly proud of our team and the extraordinary efforts they have shown in dealing with one of the most challenging six months the business has ever faced. During the first half we experienced unprecedented supply chain disruption following the collapse of P&H last November,” said chief executive Jonathan Miller.

“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,” he said.

The wholesaler’s collapse forced the company to implement an “interim distribution solution,” an agreement with Morrisons that relaunched the Safeway brand at McColl’s stores. However, this transition was “ahead of schedule” the group said, and due to be completed in early August.

McColl’s said it anticipated stronger results for the second half of the year as “we begin to emerge from the worst period of supply chain disruption” and uncharacteristically good weather helped sales. It also said it was making progress on the revamp of many of its stores, and on increasing its focus on the sale of groceries and chilled products.

Ebitda is likely to be “at a similar level” to last year’s; looking to 2019 and beyond, the group said, “it will remain important to manage intense cost pressures in the business.”


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