McColl's boosts revenues with new stores acquired from the Co-Op

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McColl's has expanded its store portfolio (Source: McColl's)

Convenience chain McColl's has revealed a 7.6 per cent increase in revenues for the first half after it took over a clutch of Co-Op stores.

The figures

Revenue reached £504.8m in the first half of 2017, compared to £469.2m in the same period last year.

This was largely due to the on-boarding of 298 Co-op stores, though not all of them were trading throughout the period.

The expansion means the McColls UK footprint has increased by 80 per cent since floating on the stock market in 2015.

But exceptional costs from the integration of the new stores hit pre-tax profits, which nearly halved from £8.2m to £4.5m in the period.

The group also beat expectations by improving gross margin by 90 basis points, an increase of 25.4 per cent.

Read more: Christmas come early: CMA approves McColl's acquisition of 298 Co-op stores

Why it's interesting

The grocery sector is undergoing a shakeup as the big supermarkets seek to buy up smaller contenders and other parts of the supply chain. Just this weekend it was rumoured that Asda was looking to buy bargain furniture retailer B&M.

McColl's has been caught up in the middle, as it held its own talks with Sainsbury's while the big four retailer was also looking to buy McColl's supplier Nisa.

Competition is hotting up since Tesco's buyout of Booker and Amazon's takeover of Wholefoods. Convenience stores represent an attractive level of neighbourhood penetration so McColl's has the chance to play kingmaker in upcoming deals.

Read more: Ocado shares have jumped after Friday's Amazon Wholefoods shocker

What the company said

Chief executive Jonathan Miller said: "Our focus remains on enhancing our convenience proposition through growing market share, developing our product ranges and delivering excellent customer service.

"As the wider convenience and wholesale sector evolves and continues to grow, McColl's is in a strong position to benefit. We remain confident that our standing as a leading neighbourhood retailer will allow us to continue to achieve further progress against our strategy and deliver sustainable returns for shareholders."

Read more: Nisa axes staff bonuses despite return to profit