Convenience retailer McColl’s has announced that full-year profits are to come in below expectations as a result of “unprecedented supply chain disruption” following the collapse of supplier Palmer & Harvey.
In light of “transitional challenges and continued difficult trading conditions”, McColl’s announced adjusted EBITDA for FY18 is now expected to be around £35m – down 20% from the £44m estimated previously.
The company also reported that during the 13-week period ending 25 November total like-for-like sales were flat at in Q4, an improvement on Q3 supported by a strong performance in tobacco; although full-year LFL sales were down 1.4%.
In a statement McColls said in the 12 months, following the collapse of Palmer & Harvey, it had experienced “significant supply chain disruption” and needed to accelerate the rollout of Morrisons supply to 1,300 of its stores. It said the speed of this transition created “significant challenges” and “severely disrupted” plans to resurrect its Safeway brand.
The board of McColl’s added it “remains committed” to the long term strategy for the group and will continue to develop its convenience offer, supported by its store refresh programme; focus on customer service; and increase its neighbourhood presence.
In the short term, it said managing cost pressures will “continue to be critical”, the most significant being an increase in the National Living Wage. To improve efficiency McColl’s said it is “investing in systems and processes”, alongside a programme of “estate optimisation”.
Jonathan Miller, chief executive, said: “2018 has been a very difficult year for the business, marked by unprecedented supply chain disruption and ongoing challenges. 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.”