McColl’s reports 12% FY like-for-like growth

Date : 10 December 2020

Patrick Mitchell-Fox

Senior Retail Analyst

Major UK convenience retailer, McColl’s has announced a trading update for its full year (53 weeks) to 29 November 2020.  Boosted by a strong local focus amongst UK shoppers through the pandemic episode, McColl’s community-based store estate has benefited since March from strong sales in alcohol, fresh food and tobacco, driving a 12% like-for-like uplift for the business.  Though moderating slightly towards the end of the year, this buoyant trend was sustained into Q4 with L4Ls remaining at 11.4%.

Total sales restrained by store disposals

In line with its ongoing strategic aim to right-size its store portfolio, McColl’s closed 179 units over the 12-month period.  This has notably impacted total sales, which grew nevertheless by 2.3% to reach £1.25bn, due to the strength of the underlying trend. It is expected that there will be a further reduction in the overall number of stores going forwards, as McColl’s closes the last of its legacy CTN units to focus on the development of larger stores with a fuller convenience offer. The migration of its stores to supply by the retailer Morrisons is to be completed by March 2021 to support this.

Morrisons Daily franchise stores have performed best of all

The 31 McColl’s now trading under the Morrisons Daily franchise convenience store package achieved the biggest uplifts of any stores in the overall McColl’s portfolio, benefiting from their stronger ranges in key growth categories such as alcohol, grocery and frozen. McColl’s is now in the process of reviewing the potential conversion of more of its stores to this format, where they offer the necessary space and catchment opportunities.

Jonathan Miller, Chief Executive, McColl’s Retail Group commented:

‘Despite the challenges of 2020, the pandemic has reinforced our confidence in our ongoing strategic change programme. The importance of neighbourhood stores has never been greater, and we are well positioned to continue enhancing our convenience offer by further developing our partnership with Morrisons, and further improving the quality of our estate and our overall customer experience. As we enter FY21, we expect LFL revenue growth to moderate and our sales mix to normalise over the course of the year. We expect our strategic focus on the larger convenience store format, such as Morrisons Daily, to drive incremental sales in grocery, fresh food and BWS in particular, providing opportunities for sales mix improvement.’