McColl’s accelerates switch to Morrisons supply

McColl’s the convenience retailer, has accelerated its switch to Morrisons supply following a period of “unprecedented supply chain disruption” following the failure of Palmer & Harvey.

It implemented an interim distribution solution following P&H’s administration in November last year, and has now moved more than 1,000 stores to Morrisons supply.

Chief executive Jonathan Miller said: “During the first half we experienced unprecedented supply chain disruption following the collapse of P&H last November. This temporary upheaval has inevitably impacted sales and margin performance in the c.700 stores that were formerly supplied by P&H, and has also had knock-on effects on the rest of the estate.

“However, the switch to Morrisons supply in the 1,300 stores intended for this year has been accelerated, and will now be completed in early August, ahead of schedule. At the same time we have relaunched the Safeway brand at McColl’s, providing our customers with a more competitive and higher quality food offer.”

Total sales were up 19.2 per cent at £601.7m in the first half as a result of the acquisition of 300 convenience stores last year. But like-for-like sales fell 2.7 per cent as a result of the supply chain disruption. Adjusted EBITDA was down from £16.5m to £16m.

Miller said: “On the second day of our financial year we received the news that P&H, supplier of tobacco, ambient groceries and fresh food to c.700 of our newsagents and smaller convenience stores, was entering into administration with deliveries ceasing immediately. We worked quickly to establish an interim supply solution for these stores, drawing on the support of our long-standing wholesale supplier Nisa, and our new, long-term partner Morrisons.

“Within days, with Morrisons’ support, we were able to fully re-establish tobacco supply. Within a week we were also able to extend our relationship with Nisa. Their support included direct wholesale delivery to a small number of additional stores, as well as supplying increased volumes of ambient groceries to support a hub and spoke solution for the remaining stores. In addition we put in place a further direct to store supply solution for fresh and frozen lines.

“We already had plans in place to transition c.1,300 stores to Morrisons wholesale supply over the course of 2018, starting with our larger, Nisa supplied stores. However, we immediately began to explore opportunities to rework our rollout programme and accelerate the transition of stores formerly supplied by P&H.

“We experienced further disruption in March when Fresh to Store, which was part of our interim supply chain solution, entered into administration, requiring us to set up an additional hub and spoke operation to supply chilled food to a large number of stores.”

Miller paid tribute to the work of the teams at both McColl’s and Morrisons saying it was “enabling us to move through the second half of the year with a progressively stronger, simpler and more secure supply chain which will allow us to fully focus on our strategic and customer plans.”