The Co-op Group has announced that it is selling 298 of its smaller food stores to McColl’s Retail in a deal worth £117m.
The society said the move was part of its turnaround strategy of refocusing its store estate on larger convenience outlets that can accommodate a wider range, particularly its own brand products. The sale proceeds will be re-invested in the business and fund its store opening programme. In the last two years the Co-op has opened nearly 200 new outlets with it planning to make 100 new store acquisitions during 2016. It recently bought six outlets from My Local, the convenience chain that went into administration last month.
The sale of the stores, which are 1,700 sq. ft. in size on average, is subject to approval from the CMA and McColl’s shareholders. The stores will continue to trade immediately after handover (expected from November 2016) and all staff will transfer to McColl’s.
Commenting on the sale, Steve Murrells, CEO of Co-op Food, said: “Today’s announcement is completely in line with our strategy, as these stores did not allow us to provide a sufficiently compelling own-brand offer for our members going forwards.”
The deal will significantly boost McColl’s existing portfolio of 933 convenience stores in line with its strategy to grow this part of its business as its moves away from operating newsagent outlets.
Jonathan Miller, McColl’s Chief Executive, commented: “I am delighted to announce the acquisition of 298 quality convenience stores in a transformational deal for McColl’s. This opportunity substantially accelerates our growth strategy and expands our neighbourhood presence for the benefit of our customers.
“These stores are profitable, well invested, and the perfect size for our operating model. We expect the transaction to be significantly earnings enhancing for our shareholders.”
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