Shares in McColl’s Retail Group (MCLS) plunged almost 11% on opening this morning after the c-store chain warned that the market remained “challenging and competitive” as the price war between the grocers raged on. The fall to 151.5p is well below the 191p the group floated at in February last year.
It comes despite McColl’s announcing its “best-ever” set of results in its maiden full-year as a listed company. Revenues exceeded £900m for the first time growing 6.1% from £869.4m in 2013 to £922.4m in the 53 weeks to 30 November – when adjusting for the extra week growth levels came down to 4.1%, with like-for-like sales ahead 0.7%. However, investors who are used to seeing double-digit growth from newly floated groups, with the likes of Poundland leading the way, have shown their impatience with this slow growth rate of 0.7%.
And since the year end, like-for-like sales are down by -1.2% in the 13 week period to 1 March.
McColl’s was valued at £200m at the time of its IPO in Feburary – the lower end of its range – but has mostly traded well below its flotation price of 191p ever since.
“I’m delighted to announce our first full year set of results since the IPO last February,” CEO James Lancaster said this morning. “It has been a year of strong growth despite the wider macroeconomic trends. We upped the tempo of our growth strategy finishing the period with 799 convenience stores, and acquiring our 800th shortly after the period end. Our post office conversions were completed ahead of target and are providing our customers with longer and more convenient times to carry out their post office transactions.
“The market continues to be challenging and competitive, but full of opportunities too. We will continue to grow our convenience store business as we head towards achieving our target of 1,000 stores by the end of 2016.”
Turnover was boosted in 2014 by the acceleration of its store development activity, with 45 newsagents converted to the food-and-wine model and 60 new store acquisitions completed, more than double the 23 of the previous year.
Operating profit before exceptional items increased by 13.2% to £25.5m and pre-tax profit rose from £4.4m to £12.6m.
McColl’s has proposed a final dividend of 6.8p per share, making a total of 8.5p per share for the 9-month period post IPO.
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