Fall in customer spending and struggling supply chain hits convenience store giant
McColl’s Retail Group has endured a weaker than expected Easter performance and cost inflation pressures as it continues to try to resolve “short term funding issues”.
In a trading update today, the business said it experienced softer trading through the Easter period, impacted by reduced consumer spending and supply chain disruption across the industry.
The group notes it is working with its wholesale supplier to mitigate product availability issues.
The Board now expects adjusted EBITDA for the current financial year (FY22) to be no higher than the level achieved in FY21 (£20m on a pre IFRS 16 basis).
It continues to review costs across all parts of the business in order to help mitigate difficult trading conditions.
Commenting on its ongoing efforts to secure new funding, the group’s update explains: “A potential financing solution is under active discussion with key commercial partner and lenders which would resolve the short term funding issues and create a stable platform for the business going forward.
“It should be noted that even if such a successful outcome is achieved, it is increasingly likely to result in little or no value being attributed to the group’s ordinary shares.
“The group expects to delay the publication of full year results until the resolution of the financing discussions. This may mean that the publication of the full year results is delayed beyond the end of May 2022.”
McColl’s adds that its Morrisons Daily stores continue to perform strongly, delivering like-for-like sales growth that is at least 20% better than non-converted, comparable stores, and ahead of the total convenience market.
Its Morrisons Daily store conversion programme is continuing, with 69 stores opened in FY22 so far.
The trading update states: “The move to convert stores to the Morrisons Daily format is fundamentally reshaping the business into a more profitable and sustainable model in the medium term.”