Supermarkets

McColl’s FY profit to be hit by supply chain issues

Following the impact of supply chain disruptions, the group reassured investors by saying it is now working alongside Morrisons to take steps to improve availability across its stores

McColl’s has warned that profits could be between £20m and £22m in the full-year ended 28 November 2021, down from £29.1m in FY20, as the group blamed the impact of the pandemic and supply chain issues on its FY21 performance.

In light of the disruption over the period, the retailer also expects total revenue to fall by 11.2% to £1.1bn, down from £1.25bn the prior year, which it said “principally reflected” supply chain issues in the second half of the year.  

Two-year like-for-like sales rose by 9.1% over the period, however, though on a one-year basis, like-for-like sales declined by 3.3%.

Following the impact of supply chain disruptions, the group reassured investors by saying it is now working alongside Morrisons to take steps to improve availability across its stores. 

This includes a full review of product substitutions to combat manufacturer-led product shortages, which McColl’s said remains a “major constraint”. It is reportedly seeing early signs of recovery following these measures, but still expects revenues to be affected as it starts a new financial year.

In addition, the group said its Uber Eats partnership was progressing well across 400 stores, with trials in Morrisons Daily stores driving an “even higher” online basket spend.  

It added that the accelerated expansion of Morrisons Daily format stores across its estate is already delivering “strong improvements” in performance versus pre-conversion trading. 

According to the group, its target of 450 stores in a year’s time will “fundamentally re-shape the business”, representing 40% of stores and over half of sales. It said these stores are “delivering a step change in performance with higher sales growth and strong investment returns, whilst attracting new customers to the higher grocery mix, wider breadth of product choice and own label value proposition”. 

Jonathan Miller, CEO, said: “FY21 has undoubtedly been a tough year for the business, starting with the impact of COVID-19 restrictions and ending with the widely reported and ongoing supply chain challenges. Although we have been able to partly mitigate these external factors, they have still had a significant impact on underlying trading.

“Despite this, we have made excellent progress on the strategic initiatives which are firmly within our control, including the accelerated roll-out of Morrisons Daily conversions within our estate, which is ahead of our expectations.” 

He added: “These Morrisons Daily stores are generating strong sales growth and enhanced return on investment. In less than a year’s time we expect over half our revenues to be delivered by this fascia, bringing branded, supermarket-quality convenience to our customers, with material scope to deploy further into our estate. 

“None of this could be achieved without our brilliant colleagues, who have been working incredibly hard to keep supplying our community stores with the food, goods and services they need, as well as the support from existing and new shareholders through the capital raise last August.”

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