McColl’s suffers 16% drop in profits

McColl’s announced a fall in like-for-like sales and profit before tax in its annual results, as the retailer’s purchase of stores from the Co-op incurred additional costs last year.

While revenues were up 1.9 per cent to £950.4m in the year to the end of November, like-for-like sales fell 1.9 per cent and profit before tax fell 16 per cent to £17.7m, the company said, as it released preliminary results for the period.

Premium convenience and food and wine stores saw a dip in like-for-like sales of 1 per cent, while newsagents and standard convenience stores saw a 3.3 per cent fall over the year.

But recently acquired and converted stores saw a 0.8 per cent rise in like-for-like sales. McColl’s bought 298 small food shops from the Co-operative last year, in a deal that the retailer said would “substantially accelerate” its growth strategy.

The retailer also gave a trading update for its first quarter to the end of February, disclosing that total like-for-like sales were down by 1.3 per cent in the 13-week period, which it nonetheless said was a fourth consecutive quarter of improvement. Total revenue rose 2.1 per cent.

Jonathan Miller, McColl’s chief executive, said:

2016 has been a pivotal year for McColl’s during which we were firmly established as a leading convenience retailer, delivered good financial performance in line with expectations and laid the foundations to deliver significant growth in the years ahead. With new appointments to our management team and a refreshed strategy in place, we are ready to begin the next stage of our journey to become your neighbourhood’s favourite shop.

We are pleased to have recorded our sixth successive year of revenue growth and to have met our target of operating 1,000 convenience stores, which truly marks the completion of our journey to become first and foremost a convenience business.

The retailer suggested it would keep a close eye on the impact of Brexit on shoppers’ activity, saying that the outcome of the EU referendum had created “some uncertainty for the sector”.

“Although we have not so far seen any discernible impact on customer behaviour following the referendum, wider industry data shows that concerns around price have resurfaced and customers continue to shop around, shopping little and often to manage their budgets,” said Mr Miller.