Following yesterday’s news that c-store chain My Local has filed a notice of intention to appoint administrators, Morrisons has offered to hire staff that lose their jobs if the business fails.
A team led by retail entrepreneur Mike Greene and backed by Greybull Capital, bought the 140 stores from Morrisons last September for £25m. My Local currently employs around 1,700 staff, many of whom worked in the stores when they were owned by Morrisons.
A statement from Morrisons said: “We are saddened and disappointed to learn that My Local is about to enter administration. We want to help our former colleagues who now work for My Local. We can therefore confirm that if no buyer is found, and stores close, we will welcome our former colleagues back to a job at Morrisons.”
Usdaw, the union that represents workers at My Local, said staff were “devastated” by the news of the possible administration. Joanne McGuinness, Usdaw national officer, commented: “Having been sold by Morrisons last year, there was a mood of optimism that the new owners could turn around the business. We are talking with the company in a bid to save jobs and get the best deal for staff.”
KPMG, which has been working with the chain’s management and its backer Greybull Capital on strategic options for the struggling business, is said to have been lined up to handle an administration. It is not certain whether administrators will be appointed but the notice of intention provides protection from creditors for 10 days.
If the My Local chain does fail, Morrisons could face liabilities of up to £20m as it retained a guarantee on a number of store lease obligations as part of the original sale agreement.
My Local has struggled to compete in the saturated convenience sector with reports suggesting that supply chain problems and poorly located sites has hampered its efforts to turnaround the chain.
Clive Black, analyst at Shore Capital, commented: “My Local’s estate isn’t consistently prime across the board. Several years ago there was a dash to get into convenience, and Morrisons bought ex-Blockbuster and HMV stores. But many of these stores have compromised access for cars and are difficult to deliver to.”
He added: “Even Tesco and Sainsbury are decelerating their express segment now.”