8th Apr 2014 13:37
LONDON (Alliance News) - McColl's Retail Group PLC Tuesday said total sales were up 3% on the year over the last 19 weeks, as it continued buying new stores, closing unprofitable ones, and converting others to "premium" stores by adding more groceries, particularly chilled and fresh foods.
The newsagent and convenience store operator, which trades under the brands McColl's, Martin's and RS McColl, listed at the end of February, raising new funds that helped it reduce its debts by nearly half. It operates in one of the fastest growing parts of the UK retail sector, but one that is being increasingly dominated by the large supermarket groups like Tesco PLC and J Sainsbury PLC.
The company said sales were up 3.0% in the 19 weeks to April 6, driven by convenience store acquisitions and conversions. Like-for-like sales were up 1.4%.
McColl's now trades from a total of 725 convenience stores, representing 56% of its total store base of 1,279, after it acquired 10 new "premium" convenience stores during the period. It also converted a further 93 standard convenience stores into premium convenience stores by adding a wider range of groceries, particularly chilled and fresh foods.
It also converted 11 newsagent stores to food and wine stores, by adding a focused range of grocery and alcohol. It also closed four underperforming stores during the period.
During the period, the group completed its post IPO debt refinancing, which it said has significantly reduced its debt levels and debt service costs. It said it has reduced its gross banking borrowing to GBP60.9 million, down from GBP109.9 million.
Its plans for 2014 are to increase its premium convenience store portfolio further, by converting existing standard convenience stores and through targeting acquisitions of independent convenience stores.
McColl's also has an agreement with the Post Office. A third of McColl's stores have a Post Office, according to its website and as at February 21, McColl's operated 432 post office branches, more branches than are operated by the Post Office itself. It said that on average, each contributed roughly GBP13,000 net profit per year before occupancy costs for the year ended November 24, 2013.
The Post Office is currently undergoing a huge modernisation programme, backed by significant investment from the UK government. It is introducing two new post office models - local style post office branches and main style post office branches.
McColl's is taking part in the Post Office?s modernisation programme, by converting existing post office counters into new post office models, and by increasing the number of post offices within its own stores.
McColl's entered into a new conversion agreement with the Post Office on February 3, whereby it agreed to convert 191 of its own branches to the Post Office's new local operating format, receiving a conversion payment, part of which was paid up-front on signing the agreement, for each branch its converts.
Under the agreement, each branch conversion needs to be completed before the end of 2014, otherwise McColl's has to repay the up-front transition payment it received from the Post Office.
McColl's said that it will use the funds received from the Post Office to improve its existing stores and to acquire up to a further 30 convenience stores, and, or to fund the conversion of a substantial number of existing newsagents into food and wine stores.
"The convenience market fundamentals remain very positive and the board is confident that the group's growth strategy in convenience is on-track and that the benefits of the acceleration in development will come through in the near future," the firm said in a statement.
McColl's shares were trading 0.6% higher at 176.00 pence per share Tuesday afternoon.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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