REG - McColl's Retail Grp - Trading Statement

Mccoll'S RetailAnnouncement

08/12/2021 07:00

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RNS Number : 9001U  McColl's Retail Group plc  08 December 2021

8 December 2021

 

McColl's Retail Group plc

 

FULL YEAR 2021 TRADING UPDATE

for the 52-week period ended 28 November 2021 ("FY21")

 

Significant strategic progress achieved with Morrisons Daily roll-out

despite impact of COVID-19 and UK supply chain disruption

 

Jonathan Miller, Chief Executive, 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. 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."

 

Financial highlights

·    Total FY21 revenue declined by 11.2% to £1.11bn (FY20: £1.25bn),
principally reflecting supply chain disruption in the second half and the
conclusion of our store optimisation programme

·    Two-year like-for-like (LFL)(1) sales growth of 9.1%, with sales
retained at a higher level than pre-COVID. On a one-year basis, LFL sales
declined by 3.3% (FY20: 12.0%)

·    Top-line growth moderated in the fourth quarter due to industry-wide
availability issues across the estate, with one-year LFL revenues in the
period down by 5.0%

·   Adjusted EBITDA pre IFRS 16 is expected to be between £20m to £22m
(FY20: £29.1m). Post IFRS 16, adjusted EBITDA is expected to be between £46m
to £48m (FY20: £57.9m)

·    Net debt impacted by availability and timing of working capital
outflows. Year-end position (pre IFRS 16) expected to be c. £97.0m (FY20:
£89.6m)

·    Lending banks remain supportive with ongoing discussions towards an
agreement for FY22 and the balance of the facility. Discussions are expected
to conclude by the publication of FY21 results in March 2022

 

Morrisons Daily store conversion programme

·   Total of 185 Morrisons Daily stores trading at year-end, ahead of
schedule, with 154 conversions completed during FY21

·  Increased target of Morrisons Daily conversions from 350 to 450 stores
by the end of FY22, with significant potential to further increase stores
being explored across all store sizes

·   Proven capability of 12 conversions per week, materially ahead of
original forecasts

·   H2 conversions delivering 24.8% 2-year LFL sales growth despite
availability issues and 2-year cash payback, with significant upside
opportunity

 

Operational highlights

·    Format, space and range changes launched across 30% of McColl's
estate, to meet local customer needs whilst delivering stronger sales and a
more profitable mix

·   Uber Eats partnership progressing well across 400 stores, with trials
in Morrisons Daily stores driving an even higher online basket spend

·    Store rationalisation programme now largely complete with 100 stores
divested during the year, leaving 1,165 stores at end of year (FY20: 1,265)

 

Outlook

Working with our wholesale partner Morrisons, we have taken steps to improve
availability in our stores. This includes a full review of product
substitutions to address manufacturer led product shortages, which remains the
major constraint. With these measures we are seeing early signs of recovery,
but we expect revenues to continue to be affected as we start the new
financial year.

 

The accelerated expansion of Morrisons Daily format stores across the estate
remains on track and is delivering strong improvements in performance versus
pre-conversion trading. Our target of 450 stores in a year's time will
fundamentally re-shape the business, representing 40% of stores and over half
our sales. 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. The Board remains confident in our strategy as we
position ourselves for sustained profitable growth in the coming years.

 

Preliminary Results for the 52-week period ended 28 November 2021 are expected
to be announced in late March 2022. The reporting date will be communicated in
due course.

 

Analyst and Investor Presentation

A presentation will be held for analysts and investors today at 8.30am (GMT)
to provide greater insight into the performance of the Morrisons Daily format
and to give more detail on the supply chain disruption experienced during the
year. All presentation materials will be available on our website. A webcast
of the presentation will be available via the following link:

 

www.incommuk.com/customers/online (http://www.incommuk.com/customers/online)

Access Code: 374565

 

1. Like-for-like sales are on a 52-week vs 52-week basis. LFLs reflect sales
from stores that have traded throughout the current and prior financial
periods, and sales include VAT but exclude sales of fuel, lottery, mobile
phone top up and travel tickets.

 

Enquiries

 

For further information please contact:

 

 Analysts & Investors:      Tej Randhawa, McColl's   +44 (0)1277 372916

 Media:                     Ed Young, Headland       +44 (0)203 805 4822
                            Rob Walker, Headland     mccolls@headlandconsultancy.com
                            Charlie Twigg, Headland

 

About McColl's Retail Group

 

McColl's is a leading community retailer, with an estate of over 1,100 managed
convenience stores and newsagents. We operate McColl's and Morrisons Daily
branded convenience stores as well as newsagents branded Martin's across the
UK, except in Scotland where we operate under our heritage brand, RS McColl.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No 596/2014

 

LEI: 213800R1TLR536P8YJ67

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