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Annual sales at McColl’s Retail Group (MCLS) smashed through the £1bn barrier last year thanks to the rapid expansion of its store portfolio.

Total revenues in the 52 weeks ended 26 November 2017 jumped 19.1% to £1.1bn following the integration of the 298 shops acquired from Co-op.

However, like-for-like growth for the year came in at just 0.1% as a decline in traditional categories, such as news and confectionery, held the group back, but it was a big improvement on the 1.9% decrease in the prior year.

McColl’s said that it made “good progress” towards its strategic target of increasing grocery and alcohol sales at the group, which was up more than 40% and now represented 32% of total sales, compared with 27% in 2016.

Like-for-like sales in recently acquired and converted stores increased 2.4% last year.

The business also boosted its margins thanks to a higher mix of convenience stores and improving product mix.

Adjusted EBITDA, excluding property-related items, increased by 20% to £44m, with pre-tax profits up from £17.7m to £18.4m.

Net debt at the group surged from £37m at the end of the 2016 financial year to £142.2m as a result of its takeover of the Co-op stores.

CEO Jonathan Miller said: “We have delivered a strong financial performance with a step-up in sales and profitability propelled by our acquisition of 298 convenience stores, and by surpassing £1bn in annual revenues for the first time we have demonstrated that this is now a business of real scale.

“Our convenience-led strategy continues to bear fruit, reflected by a sustained improvement in gross margin as we strengthened our product mix and the proportion of convenience stores has grown to 80% of our estate.

“Continuing this momentum, this year we will significantly enhance our customer offer as we transition supply in over 1,300 stores to Morrisons and exclusively launch hundreds of new Safeway branded products at McColl’s. We will also further invest and improve the quality of our estate by extending our successful convenience store refresh programme to 100 additional stores this year.

“I would like to take this opportunity to thank all our hard-working colleagues and loyal customers, as we look forward to making further progress on our journey to become your neighbourhood’s favourite shop. 2018 is set to be another busy year for McColl’s, and I remain confident and excited about our future.”

Shares in the group crashed almost 10% to 225.3p as the stock exchange opened this morning.

Morning update

A return to growth in the fourth quarter failed to lift Reckitt Benckiser (RB) as the Dettol to Durex maker reported flat like-for-like sales for 2017.

Revenues jumped 15% to £11.5bn during the year, boosted by the acquisition of US baby milk group Mead Johnson last year.

The base business delivered a “solid” end to the year, with 2% like-for-like net revenue growth in the fourth quarter, driven by 5% growth in health. Reckitt said the Mead takeover meant more than 50% of revenue now comes from higher margin consumer health brands.

CEO Rakesh Kapoor restructured the group towards the end of last year into two separate business units – one focused on health and the other on home and hygiene. Kapoor hopes the move will reignite growth for Reckitt, which issues two sales warnings and was hit by a massive cyber attack last year.

He predicted top-line growth would return this year, with like-for-like sales forecast to rise at a rate of 2-3%.

“2017 was a significant year in RB’s journey to become a global leader in consumer health,” Kapoor said.

“We returned to growth after a solid finish to the year, our acquisition of MJN is firmly on track and the creation of two business units - RB Health and RB Hygiene Home - will drive long-term growth.

“For 2018 we are targeting +13-14% total revenue growth (implying +2-3% LFL revenue growth). Whilst 2018 will see some specific factors impacting margin, we reiterate our medium-term target of moderate operating margin expansion.”

Operating profits for 2017 increased 14% to £2.7bn and pre-tax profits was up from £2.3bn in 2016 to £2.5bn.

Shares in Reckitt slumped 3.2% to 6,363p as the market opened this morning.

This week in the City

Tomorrow brings the final quarter results from Walmart and Asda. Luxury chocolate retailer Hotel Chocolat reports its full-year figures on Wednesday. And Thursday sees British American Tobacco releasing its preliminary annual results.