McColl’s will reduce the size of its estate from its current 1,434 stores to 1,100

McColl’s is planning to dispose of hundreds of stores as part of a store optimisation programme.

The convenience retailer announced today the plan involves reducing the size of its estate from its current 1,434 stores to 1,100 within three to four years. Reporting its preliminary results for the year to 24 November, McColl’s also confirmed it had closed 120 newsagents and smaller convenience stores during the period and opened 10 new convenience stores.

McColl’s said the closures were a key factor as full-year revenue fell 1.8% to £1.22bn.

Like-for-like sales were back level for the year compared to a 1.4% decline in 2018.

Overall adjusted gross profit fell by 2.1% to £315.7m, reflecting the decline in total sales.

The retailer also said sales in early 2020 had been “encouraging”, with the group delivering a like-for-like sales improvement of 0.5% for the 11 week period ended 9 February 2020.

Last year McColl’s carried out full range reviews across BWS, soft drinks and confectionery. It plans to look at all other categories this year.

It completed the BWS review in the summer, introducing more craft and world beers. CEO Jonathan Miller said the category was up 3.7% like for like in the past 12 weeks. The reviews on confectionery and soft drinks completed at the end of the year and Miller said he was “delighted with the results and expect to see continued uplifts in 2020 as we tackle the remaining categories”.

Miller said there were big plans in the pipeline to drive food-to-go sales, an area in which it still under-indexes against many of its competitors.

The retailer is trialling a new food-to-go concept at a recently opened store in Coventry. The new-build store opened in November and is the first McColl’s store to feature a modular hot food-to-go offer and seating area. The store is currently hitting sales of £22,000 a week, 10% of which is food to go.

McColl’s is also trialling a new simpler operating model in some stores. The model looks to reduce the cost to serve customers with features such as shelf-ready packaging.

Its supply deal with Morrisons was bedding in well, said Miller, with strong on-shelf availability. It is extending its trial of Morrisons Daily fascias from 10 to 30. The additional 20 store conversions will be completed in the coming weeks.

“We have stabilised the business and refocused on retail execution in 2019, in line with our key priorities for the year. Against challenging trading conditions we have made good operational progress, whilst reducing debt and making appropriate levels of investment,” said Miller.

“Looking ahead to FY20, we are embarking on a strategic change programme, refining our model and better tailoring our offer to the customers and communities we serve, using the learnings to build the foundations for future growth.

“The fundamentals of the convenience sector remain strong and, with our improving customer proposition, I am confident in delivering sustainable returns for shareholders over the long term.”