Full Year Trading Update

RNS Number : 1408I

McColl's Retail Group plc

10 December 2020

 

10 December 2020

McColl's Retail Group plc

FULL YEAR 2020 TRADING UPDATE

Trading update for the 53-week period ended 29 November 2020¹

Financial highlights

· Total FY20 revenue up 2.3% to £1.25bn (FY19: £1.22bn), reflecting strong demand since the onset of the COVID-19 pandemic, partly offset by store closures as we make good progress with our store optimisation programme.

· Like-for-like (LFL)² sales growth for the year of 12.0% (FY19: 0.0%) driven by a strong performance in BWS, fresh food and tobacco. LFL sales growth in Q4 of 11.4%.

· Despite strong demand, a change in shopping behaviour during the pandemic has resulted in margin pressures due to a change in product mix. In addition, we have experienced lower services revenues as well as ongoing COVID-19 related costs. Adjusted EBITDA pre IFRS 16 is expected to be between £29m to £30m (FY19: £32.1m). Post IFRS 16, adjusted EBITDA is expected to be c.£58m.

· Continued progress with debt reduction programme with year-end net debt position (pre IFRS 16) improved to £91.4m (2019: £94.1m), despite delay in head office sale.

Operational highlights

· Kept all stores trading safely and implemented numerous initiatives to serve our communities and support key workers.

· Extended customer offer to meet change in demand and selectively invested in price of chilled foods, fruit and vegetables, and milk.

· Strongest performance delivered through Morrisons Daily format, with significant LFL sales growth. Reviewing opportunity to convert further sites in the first half of next year, adding to the 31 trial stores in current operation.

· Currently migrating the remaining part of our estate to Morrisons supply, in order to simplify our operations, which is expected to complete by March 2021.

· Accelerated store optimisation plans during H2, with 179 stores closed in FY20, in line with our strategy to increase focus on larger, more profitable, convenience stores.

Jonathan Miller, Chief Executive, said: "As we look towards the festive period, the safety and well-being of our colleagues and customers continues to be our number one priority. I am extremely proud of all of our colleagues who have been working incredibly hard to keep supplying our neighbourhood communities with the food, goods and services they need.

"Since the onset of the pandemic, we have seen strong demand driven by our customer offer and the positioning of our stores in key neighbourhood locations. At the same time, we have faced significant COVID-19 related costs and our operating margins have been reduced by a change in customer behaviour and product mix.

"Despite the challenges of 2020, the pandemic has reinforced our confidence in our o ngoing 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."

 

Update on sale of head office premises

The previously announced sale of our head office premises was expected to finalise by the end of FY20, but is now expected to finalise by the end of January 2021. An initial cash payment has been received, equating to a third of the agreed £7.3m sales price, with the balance due at the end of January 2021. Given the change in timing we pre-emptively and constructively engaged with our banking syndicate to ensure that all headroom requirements were met at the appropriate testing dates.

Outlook

As we enter FY21, we expect LFL revenue growth to moderate and our sales mix to normalise over the course of the year. 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.

To further improve efficiency, we are investing in systems, processes and space optimisation, alongside the rationalisation of our store estate. The Board remains confident in our strategy as we position ourselves for sustained profitable growth in the coming years.

Preliminary Results for the 53-week period ended 29 November 2020 will be released in March 2021. The reporting date will be communicated in due course.

1. Throughout this announcement, FY19 figures are for the 52-week period ended 24 November 2019.

2. Like-for-like sales are on a 52-week vs 52-week basis. LFLs reflect sales from stores that have traded throughout the current and prior financial periods, and sales include VAT but exclude sales of fuel, lottery, mobile phone top up and travel tickets.

Enquiries

Please visit www.mccollsplc.co.uk or for further information, please contact:

Analyst & Investors:	Tej Randhawa, McColl's	[phone]
Media:	Ed Young, Headland Rob Walker, Headland Charlie Twigg, Headland	[phone] [e-mail]

Notes to editors

McColl's is a leading neighbourhood retailer, with an estate of around 1,300 managed convenience stores and newsagents. We operate McColl's branded convenience stores as well as newsagents branded Martin's across the UK, except in Scotland where we operate under our heritage brand, RS McColl.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014

LEI: 213800R1TLR536P8YJ67

 

END

 

 

TSTFSMFAUESSELE