McColl's Retail Group plc Response to media speculation (9459C)
28 Febrero 2022 - 1:00AM
UK Regulatory
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RNS Number : 9459C
McColl's Retail Group plc
28 February 2022
28 February 2022
McColl's Retail Group plc
Response to media speculation
Further to recent media speculation, McColl's Retail Group
("McColl's" or "the Group"), the UK's leading community retailer,
provides the following update.
Update on financing
The Group confirms it remains in ongoing discussions with its
lending banks, as previously announced on 29 November 2021, towards
a longer-term agreement in relation to the balance of the facility.
The Group has received the necessary agreement to roll forward its
financial covenant test periodically, and continues to receive
credit support from its key commercial partner to enable these
discussions. The Group continues to believe that a financing
solution will be found that involves its existing partners and
stakeholders. A further update will be made as and when these
discussions conclude.
In September 2021, the Group successfully completed a placing
and open offer, raising net proceeds of GBP30 million. Two-thirds
of these net proceeds were raised to accelerate and enhance the
Morrisons Daily store rollout in FY21 and FY22, which is on track.
As at the end of the financial year, the Group operated 185
Morrisons Daily stores, and this number has since increased to over
200 stores in operation. The balance of these funds was to be used
to enhance the Group's working capital headroom. However, the
trading shortfall in the second half of FY21 has absorbed this
headroom, driven by the product availability challenges
experienced.
Current trading
Further to the Group's Trading Update on 8 December 2021, it
confirms that, subject to audit, financial results for the 52-week
period ended 28 November 2021 were in line with previous guidance.
This includes revenues of GBP1.11bn (FY20: GBP1.25bn), adjusted
EBITDA pre IFRS 16 of GBP20m (FY20: GBP29.1m) and net debt pre IFRS
16 of GBP97.0m (FY20: GBP89.6m).
Since the start of the new financial year, there has been a
tangible improvement of product availability in stores. However,
the business saw a material step-down in footfall due to the surge
in COVID-19 cases relating to Omicron, particularly over the
Christmas period, impacting trading. While demand has since picked
up, revenues in the first quarter are behind expectations.
Despite this, the Group delivered two-year like-for-like sales
growth of 5.9% in the 11 weeks to 13 February 2022, in line with
the neighbourhood convenience market. The Group is starting to
experience strengthening margin as impulse product sales recover,
and has taken further mitigating actions, including a full review
of pricing and costs.
Morrisons Daily stores are delivering like-for-like sales growth
that is at least 20% better than non-converted, comparable stores,
and ahead of the total convenience market. The Morrisons Daily
store conversion programme re-commenced in early February 2022,
following a scheduled pause over the Christmas and New Year period.
So far in 2022, the Group has opened 18 Morrisons Daily stores and
a further seven will be converted this week with the full support
of Morrisons. The Group remains on track to complete 450 Morrisons
Daily store conversions by the end of FY22, fundamentally reshaping
the business into a more profitable and sustainable model in the
medium term.
As a result of the difficult market conditions in the first
quarter, some of which are expected to continue through the first
half, the Board now expects FY22 adjusted EBITDA to be slightly
behind current market expectations, and net debt in the region of
GBP100m at the end of FY22.
Outlook
As previously stated, the Group continues to believe that a
financing solution will be found that involves its existing
partners and stakeholders. However, there are also other options
available to it. The Group confirms that it recently received an
approach for the whole business, which has subsequently been
withdrawn and there are no further discussions with that party or
any other party in relation to an offer for the whole business. In
addition, the Group has also received indications of interest for
parts of the business. The Board will consider all options with the
aim of maximising value for all stakeholders.
Timing of FY21 full year results
The Group is in the process of finalising its full year results,
but now expects to publish in May 2022 to allow additional time for
banking discussions to conclude.
Enquiries
Analyst & Investors: Tej Randhawa, McColl's +44 (0)1277 372916
Media: Ed Young, Headland +44 (0)203 805 4822
Rob Walker, Headland mccolls@headlandconsultancy.com
Charlie Twigg, Headland
About McColl's Retail Group
McColl's is a leading neighbourhood retailer, with an estate of
over 1,100 managed convenience stores and newsagents. We operate
McColl's and Morrisons Daily branded convenience stores as well as
newsagents branded Martin's across the UK, except in Scotland where
we operate under our heritage brand, RS McColl.
LEI: 213800R1TLR536P8YJ67
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END
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