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McColl’s says retail in toughest spot for 30 years as Palmer & Harvey hits profit

McColls, the convenience shop chain, has signed a supply deal with Morrisons last year: Morrisons
McColls, the convenience shop chain, has signed a supply deal with Morrisons last year: Morrisons

The boss of convenience retailer McColl’s on Monday said that the business was still reeling from the collapse wholesaler Palmer & Harvey, sending the shares tumbling.

“It’s been a tough six months. It’s taken us until today to work through the impact of that,” said chief executive Jonathan Miller. “It’s the toughest period we’ve seen for 30 years,” he added, talking about the wider changes in the groceries arena.

The demise of Palmer & Harvey, which supplied more than half of McColl’s stores, meant it had to set up a temporary distribution system, while its margins deteriorated slightly.

Miller also warned that profits for the year are likely to be flat despite an increase in revenues to £601 million. The shares fell sharply by 14.1%, or 29.6p, to 180.3p.

Same-store sales were down 2.7% for the first half to May 27, while underlying profits came in at £16 million, £500,000 lower than the same time last year. Miller insisted that “the worst period is behind us”.

McColl’s inked a deal with Morrisons last year, with the supermarkets chain now supplying its own Safeway products.

Retail analyst Nick Bubb said: “The share price is over 20% down this year and it [fell] further after the belated admission from management that the supply disruption to its stores has gone on for longer than could reasonably have been expected.”