McColl’s suspends dividend as it swings to £100m loss
Convenience store McColl’s sank to a huge £100m loss in 2019 as it warned investors it will cancel their dividend today.
McColl’s swung deep into the red last year, falling to a loss of £98.6m before tax, down from a 2018 profit of £7.9m.
The retailer warned in December that it would miss profit expectations due to “unseasonable weather” and weak consumer confidence.
Adjusted earnings before interest, tax, depreciation and amortisation hit £32.1m, in line with December’s alert.
“Deleveraging the balance sheet is one of our key priorities for 2020 so, in combination with a number of cash management initiatives implemented by the executive team, the Bboard has taken the difficult but prudent decision to suspend the final dividend for the 2019 financial year,” the firm said today.
“The Board recognises that dividend payments are an important part of the Group’s returns to shareholders and will keep the dividend policy under review with the aim of reinstating the payment of dividends at an affordable and sustainable level, once our strategic change programme gathers momentum and the group deleverages.”
McColl’s blamed “softer market conditions” in the second half of 2019 for the drop in today’s trading update. Investors are set to book a basic loss per share of 83.3p, far down from 2018’s 5.95p earning per share.
The business also warned it is reviewing its 2018 balance sheet to reclassify a £2.6m accrual as a liability and a £10m loan as a liability.
“Neither reclassification has any impact on the statement of comprehensive income or total shareholder funds as reported in the prior year,” McColl’s said.
The retailer trimmed net debt from £98.6m in 2018 to £94.1m.
“We have stabilised the business and refocused on retail execution in 2019, in line with our key priorities for the year,” chief executive Jonathan Miller said.
“Against challenging trading conditions we have made good operational progress, whilst reducing debt and making appropriate levels of investment.
“Looking ahead to FY20, we are embarking on a strategic change programme, refining our model and better tailoring our offer to the customers and communities we serve, using the learnings to build the foundations for future growth.”