Shares of British convenience shop and newsagent operator McColl's Retail Group (LON: MCLS) have tumbled Wednesday as continued supply chain disruptions have impacted the company's revenues in Q4.
In a statement released this morning, McColl's said, “external factors, including the ongoing nationwide shortage of delivery drivers, labour shortages at distribution centres and insufficient supply of key products, including high margin branded impulse lines, continue to impact the supply chain nationwide and have intensified in the fourth quarter.”
McColl's shares are currently down 15% at 15.3p after initially touching a low of 11.6p.
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In August, the company, which trades under the Morrisons Daily, McColl's, and Martin's names, warned in its interim results that if the issues did not improve in H2, then its full-year performance may fall short of expectations.
“While we continue to work collaboratively with our wholesale partner, Morrisons, to lessen the effect of the disruption, we have been unable to fully mitigate the impact to stores, leading to significantly lower revenues than initially anticipated,” McColl's added.
The London-listed company's FY21 adjusted EBITDA is now expected to be in the range of £20 million to £22 million.
Jonathan Miller, CEO of McColl's, said: “It is disappointing to see supply chain issues worsen through the second half, but external factors have not eased, and continue to impact much of the UK economy. We are working collaboratively with our wholesale partner Morrisons to restore in-store product availability as quickly as possible.”
The company added that its Morrisons Daily stores continue to deliver a solid performance, with revenue growth significantly above its other stores. The growth of Morrisons Daily has been driven by a high grocery mix and a more comprehensive product choice.
At a capital raise, the company initially indicated a 2 to 3-year payback on investment. It now predicts a return towards the shorter end of this range.
Miller continued: “Despite these supply chain issues, I am delighted by the step change we are witnessing in store performance from our Morrisons Daily conversions. This new format is showing strong sales growth and is delivering better ROI than we expected. Our conversion programme is moving at pace, ahead of time and on budget, and we anticipate reaching 350 Morrisons Daily stores well in advance of our original target.”
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