McColl’s confirmed today that it has benefitted from the surging demand for groceries during the pandemic with its annual like-for-like sales jumping 12%, having been stagnant the year before.
With consumers shopping more in local convenience stores during the crisis, McColl’s highlighted that it had seen particularly strong performance in the BWS, fresh food and tobacco categories. Like-for-like sales growth in the final quarter of the year to 29 November rose 11.4%.
However, McColl’s total annual revenues increased only 2.3% to £1.25bn after the strong demand since the onset of the pandemic was partly offset by store closures as part of its ongoing estate optimisation programme.
The group also highlighted that changes in shopping behaviour during the crisis had resulted in margin pressures due to a change in product mix. In addition, McColl’s experienced lower services revenues as well as ongoing Covid-19 related costs. The group now expects its adjusted annual EBITDA to come in between £29m to £30m, compared to £32.1m last year.
McColl’s revealed that some of the strongest performances had been seen its Morrisons Daily format stores, which saw “significant” like-for-like sales growth. The group stated that it was reviewing the opportunity to convert further sites to the format in the first half of next year, adding to the 31 trial stores currently in operation.
In addition, the retailer is migrating the remaining part of its estate to Morrisons supply to “simplify its operations”. This process is expected to be completed by March 2021.
Meanwhile, McColl’s revealed that it had accelerated its store optimisation plans during the second half of the year, with 179 stores closed in 2020, in line with its strategy to increase its focus on larger, more profitable, convenience stores.
Chief Executive Jonathan Miller 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.”
Looking ahead, the group said it expects like-for-like revenue growth to moderate and its sales mix to normalise over the course of 2021. It added: “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.”
