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McColl’s has warned it will continue to be hit by supply chain shortages despite early signs of a recovery as the convenience store group revealed revenues tumbled 11.2% to £1.1bn in the year ended 28 November 2021.

In a pre-close trading update this morning, the group said it was working with wholesale partner Morrisons to improve availability in stores, with a full review of product substitutions to address “manufacturer led” shortages.

“With these measures we are seeing early signs of recovery, but we expect revenues to continue to be affected as we start the new financial year,” the statement added.

Last month, McColl’s issued a second profits warning of the year as a result of shortages of key impulse lines such as snacks and alcohol.

This morning it attributed the 11.2% decline in annual turnover mostly to the disruption at the end of the year, with like-for-like sales down 5% in the fourth quarter.

Despite a 3.3% fall in like-for-like sales for the year, McColl’s is still trading above pre-pandemic levels, with two-year like-for-like numbers up 9.1%.

As flagged in the profits warning, adjusted EBITDA for the year is expected to be materially lower than forecast at between £20m and £22m.

Net debt at the business also climbed £7.4m higher year on year to end the period at £97m.

McColl’s said its lending banks remained supportive with ongoing discussions towards an agreement for the new financial year expected to conclude by March when it publishes the 2021 results.

CEO Jonathan Miller said 2021 had “undoubtedly been a tough year” for the business, starting with the impact of Covid restrictions and ending with the ongoing supply chain challenges.

“Although we have been able to partly mitigate these external factors, they have still had a significant impact on underlying trading,” he added.

“Despite this, we have made excellent progress on the strategic initiatives which are firmly within our control, including the accelerated roll-out of Morrisons Daily conversions within our estate, which is ahead of our expectations. These Morrisons Daily stores are generating strong sales growth and enhanced return on investment. In less than a year’s time we expect over half our revenues to be delivered by this fascia, bringing branded, supermarket-quality convenience to our customers, with material scope to deploy further into our estate.

“None of this could be achieved without our brilliant colleagues, who have been working incredibly hard to keep supplying our community stores with the food, goods and services they need, as well as the support from existing and new shareholders through the capital raise last August.”

Shares shot up 6.8% to 12.8p this morning, but remain down more than 50% in the year to date.

Morning update

SSP Group has slumped to another loss of more than £400m as revenues remain well below pre-pandemic levels at the Upper Crust operator.

The group, which runs food outlets in travel locations across the world, revealed pre-tax losses for the year ended 30 September totalled £411.2m - an improvement on £425.8m in 2020.

Revenues at the group declined 41.8% to £834.2m, which is more than 70% lower than before the pandemic hit.

However, SSP, which last week revealed it had appointed Greencore boss Patrick Coveney as its new CEO, pointed to improving trends as the travel market continued to recover.

Revenues improved from 21% of 2019 levels at the end of the first half to 53% by the end of the year, led by a recovery in domestic and short-haul leisure traffic in North America and more recently Europe and the UK.

In the first nine weeks of the new financial year, revenues are currently averaging approximately 66% of 2019 levels.

SSP said it was confident in its ability to manage any short-term volatility created by the Omicron Covid variant.

The group expects to return to 2019 levels by 2024 as outlets continue to reopen, with a further 800 operating again since the beginning of June, taking the total sites open to almost 2,000, which is about 72% of the estate.

Deputy CEO and CFO Jonathan Davies said SSP had made strong progress but was still in recovery phase.

“Our teams around the world have demonstrated great resilience during this challenging period and, most importantly, have continued to deliver great service to our customers every day,” he added. “I would like to thank them for their professionalism, dedication and commitment to SSP.

“Against the backdrop of volatility and disruption in the travel sector, we’ve maintained strong operational controls and disciplined management of operating costs and cash flow, as has been evident from the financial performance of the business.”

 Shares in the group jumped 1.9% higher to 237.7p this morning, but still remained a long way off pre-pandemic prices of above 550p.

SSP also this morning announced the appointments of Apurvi Sheth and Kelly Kuhn to its board as non-executive directors.

Sheth has extensive executive experience across numerous well-known international food and beverage companies such as Nestle, Coca-Cola, PepsiCo and, most recently, as MD of Diageo in Southeast Asia.

Kuhn has previous exce roles in the travel sector and was most recently excecutive vice president and chief customer officer of CWT (formerly Carlson Wagonlit Travel), a travel management company operating across six continents.

Nestlé has agreed to scale back its holding in L’Oréal to about 20% with the sale of a 4% stake worth €8.9bn back to the cosmetics giant.

The Swiss group’s stake in L’Oréal has come under scutiny in recent years, particularly from activist hedge fund Third Point, which has called for a sale of the shares.

L’Oréal is paying €400 each for 22.3 million shares and then cancel them.

“Following the transaction, Nestlé will own 20.1% of L’Oréal and remains fully supportive of the company’s value creation strategy,” Nestlé said.

It will also retain its two positions on the L’Oréal board.

Nestlé shares are up this morning 1.3% to CHF 123.50, while L’Oréal shares climbed 1.2% to €429.90.

The FTSE 100 recovery continued this morning, with the index up 0.3% to 7,363.67pts.

Yesterday in the City

The FTSE 100 continued its fightback from Covid worries as early signs show the new variant is not as bad as first feared. London’s leading index of shares rose 1.5% to 7,339.90pts.

Shares on the rise included Vimto owner Nichols, THG and Just Eat Takeway, up 5% to 1,490p, 4.9% to 181.2p and 4.9% to 4,350p respectively.

Fallers included B&M European Value Retail, down 1.9% to 627.6p, Domino’s Pizza Group, down 1.9% to 361.6p, and Glanbia, down 1.8% to €11.79.