Supply chain disruption hits profits at McColl's

21 February 2019

Convenience store and newsagents owner McColl’s has blamed supply chain woes caused by the collapse of wholesaler Palmer & Harvey for a sharp drop in profits.

Profits at McColl's fell by 57% to £7.9m while same-store sales declined 1.4% compared the previous year.

The collapse of Palmer & Harvey in November 2017 caused loss of supply to 700 of its stores, McColl's said.

The “major disruption” caused by the collapse of wholesaler, which supplied chains such as Costcutter as well as Tesco and Sainsbury’s, forced MColl’s to speed up a deal with Morrisons.

“Moving to a new wholesale supply partner, at a much faster pace than anticipated, created its own challenges and severely disrupted our plans for the launch of Safeway,” the company said.

Overall revenues were up 8.1% to £1.24bn following the purchase of nearly 300 convenience stores in 2017. 

McColl’s chief executive Jonathan Miller said: “2018 was undoubtedly a challenging year, marked by supply chain disruption following Palmer & Harvey’s entry into administration and the accelerated transition to our new supply partner, Morrisons.

“Despite this disruption, we continued to make progress against a number of our key strategic plans.”

Miller said the chain had converted 1,300 stores to Morrisons supply in less than nine months, representing “a considerable achievement” and giving the company “a more secure supply chain and a higher quality chilled and fresh offer”.

McColl’s refurbished 59 convenience stores in the year and acquired 11 new stores in 2018. It expects to acquire a small number of new stores this year and refurbish a further 30.

When Palmer & Harvey collapsed in November 2017 it had debts of more than £700m, according to administrators PwC.

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