McColl’s cautions over ongoing supply chain hit despite signs of a recovery

Convenience store chain McColl’s has said it is seeing signs of a recovery from supply chain disruption, but warned over an ongoing hit to sales.

The McColl’s and Morrisons Daily operator, which alerted over profits last month due to supply woes, said product shortages remain a “major constraint” on trading.

It is tackling this by working with wholesale partner Morrisons to improve stock in shops, including plugging gaps on shelves with alternatives, though it said sales are still coming under pressure.

The group, which has 1,165 stores nationwide, said: “Working with our wholesale partner Morrisons, we have taken steps to improve availability in our stores.”

“With these measures we are seeing early signs of recovery, but we expect revenues to continue to be affected as we start the new financial year.”

Shares, which had plunged on last month’s profit warning, edged higher on hopes the disruption may be easing.

It revealed last month that snacks – such as crisps, beers, wines and spirits – were among the products hit hardest by the supply chain crisis.

Full-year underlying earnings are expected to fall to between £20 million to £22 million as a result of the shortages, down sharply on the £27 million previously forecast in the City and the £29.1 million reported a year earlier.

In its full-year trading update on Wednesday, it laid bare the impact of the supply problems on sales, revealing that total revenues tumbled by 11.2% to £1.1 billion.

Like-for-like sales dropped 5% in the final three months, leaving them 3.3% lower overall in the year to November 28.

Jonathan Miller, chief executive of McColl’s, said it had “undoubtedly been a tough year for the business, starting with the impact of Covid-19 restrictions and ending with the widely reported and ongoing supply chain challenges”.

“Although we have been able to partly mitigate these external factors, they have still had a significant impact on underlying trading,” he said.

The group will report full-year figures in late March.