Convenience retailer McColl’s saw profits fall in the first half of 2018 as they still suffered from the collapse of supplier Palmer and Harvey.
Like-for-like sales were down 2.7 per cent, with profits before tax down to £2.3 million, following a six months described by chief executive Jonathan Miller as “one of the most challenging the business has ever faced”.
In November last year grocery wholesalers Palmer and Harvey, who also supplied Tesco, Sainsbury’s and Costcutter collapsed with more than £700m debt. McColl’s switched to using Morrisons wholesale service as a result.
Miller said: “During the first half we experienced unprecedented supply chain disruption following the collapse of P&H last November. This temporary upheaval has inevitably impacted sales and margin performance in the c.700 stores that were formerly supplied by P&H, and has also had knock-on effects on the rest of the estate.”
Miller said the company had accelerated their switch to Morrisons supply, which will be completed in early August ahead of schedule.
“At the same time we have re-launched the Safeway brand at McColl’s, providing our customers with a more competitive and higher quality food offer. We will therefore have a progressively stronger and simpler operational position with a more compelling offer as we move through the second half and into 2019,” said Miller.
“As the convenience sector continues to grow, we remain confident that our clear strategy will allow us to make further progress and deliver sustainable returns for shareholders.”
Miller stated the company expects to recover in the second half of 2018, with full year pre-tax profits anticipated to match last year’s results.
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