Mccolls (LON:MCLSM)
Supply chain partnership and acquisition
In a significant move, the neighbourhood retailer has partnered with Morrisons for the long-term supply of fresh food and groceries. Financial performance in H117 was robust despite challenging economic conditions. The acquisition of 298 stores from the Co-op creates a platform for further development. We believe that McColl’s has identified a clear strategy in the UK convenience channel, which is forecast to grow 18% to £47bn by 2022, according to IGD.
Supply chain partnership with Morrisons
The long-term partnership provides McColl's with a best-in-class fresh food and grocery offer through the relaunched Safeway brand, and is exclusive for 12 months. It significantly improves the company’s fresh food presence and enhances the range. It improves commercial terms and simplifies the supply operation.
H117: Increasing neighbourhood presence
H117 results signal that McColl’s is on track to deliver its seventh year of sales growth, with revenue up 7.6% y-o-y and like-for-like sales up 0.2%. The acquisition of 298 stores from the Co-op affects FY17 profits, but their successful integration builds business momentum. Performance is supported through investment and estate growth (of 80% in convenience stores since the 2014 IPO), with a focus on customer service, and growing neighbourhood presence and the convenience offer.
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