McColl’s shares tanked on Thursday after the convenience retailer warned that its full-year performance could fall short of management expectations due to availability issues, and confirmed plans for a £35m equity raise.
In an update for the 26 weeks to 30 May, the company said like-for-like sales rose 1% against a strong comparative period, and two-year LFL sales were 7.4% higher. Meanwhile, total revenue was down 5.3% to £572.7m, mainly due to store closures and losses after tax widened to £6.3m from £1m in the first half of 2020.
McColl’s said that as social distancing restrictions have eased, there has been a stabilisation in underlying gross margin trends as customers revert to pre-pandemic buying patterns.
“This includes more frequent visits with lower basket sizes and increased sales of higher-margin impulse products,” it said.
“Despite this, revenues have been impacted by availability issues in stores over recent months due to supply chain disruption. This has been caused by the widely publicised nationwide shortage of delivery drivers due to a combination of external factors. We have put in place a number of temporary mitigating actions and continue to work closely with our supply chain partner to resolve these challenges as quickly as possible.
“If these challenges to trading do not materially improve in the second half of the financial year, the performance in the full year is likely to fall short of management expectations.”
McColl’s also confirmed plans for a capital raising comprised of a firm placing to raise £30m and an open offer to raise up to £5m as it looks to accelerate its partnership with Morrisons.
The proceeds will be used to increase the number and accelerate the pace of rollout of Morrisons Daily stores from 56 to 350 and to further improve the grocery infrastructure in the Morrisons Daily sites. They will also be used to strengthen the balance sheet.
The shares closed down 26% at 21.50 p.
