Supply chain crisis casues profit warning for Morrisons Daily operator

The operator of Morrisons Daily stores, McColl’s Retail Group, has been forced to issue a profit warning after it continued to see “significantly lower revenues” caused by supply chain issues.

Retailers have been particularly badly hit by the Brexit-related problems, and the issues continue to affect getting products onto the shelves.

McColl’s said the ongoing nationwide shortage of delivery drivers, labour shortages at distribution centres and insufficient supply of key products, has continued to impact the supply chain nationwide and have intensified in the fourth quarter.

It now forecasts adjusted EBITDA – which is a measure of operating profitability – to be between £20m-£22m for the full year. That would be significantly down on the two previous years, when it achieved £29.1m and £32.1m.

Jonathan Miller, chief executive of McColl’s, said: “It is disappointing to see supply chain issues worsen through the second half, but external factors have not eased, and continue to impact much of the UK economy.

“We are working collaboratively with our wholesale partner Morrisons to restore in-store product availability as quickly as possible.”

However it is making much more progress with its store conversion plans, and expects to have more than 150 shops in the Morrisons Daily format by the end of this month.

It expects to be smash its original target of 350 stores by November 2022.

Its acceleration of the conversions is also boosting its expectations on the return on investment after raising funds in the summer. At the time it had indicated a 2-3 year payback on investment, but now expects “a return towards the shorter end of this range”.

Miller added: “This new format is showing strong sales growth and is delivering better ROI than we expected. Our conversion programme is moving at pace, ahead of time and on budget, and we anticipate reaching 350 Morrisons Daily stores well in advance of our original target.”