Pre-tax profits fall for McColl's after Co-op stores acquisition
PROFITS at convenience store chain McColl's were almost cut in half after it took a hit from its acquisition of 298 Co-op stores, despite warm weather boosting sales.
The group said pre-tax profits fell from £8.2 million to £4.5 million in the first half of the year after it booked £2.3 million in exceptional cost linked to the deal.
But revenue rose 7.6 per cent to £504.8 million in the six months to May 28, with like-for-like sales growing 0.2 per cent.
In the second quarter, comparable sales increased 1.4 per cent, supported by "favourable weather and our evolving mix of growth products".
Chief executive Jonathan Miller said: "I am encouraged by the performance we have delivered over the first half of the year as our business has continued to gain momentum.
"We have traded well in a challenging environment, and also benefited from the recent hot weather, which has helped to drive sales in key growth categories including grocery and alcohol.
"We are delighted to have completed the integration of the acquired stores, on time and on budget."
Analysts believe the Co-op deal has the potential to drive a surge in earnings at McColl's, but the grocery sector is in flux, with a number of bigger players attempting to consolidate.
Tesco is attempting a £3.7 billion merger with Booker and a mooted attempt by Sainsbury's to acquire Nisa is also thought to be on the cards.
Mr Miller added: "As the wider convenience and wholesale sector evolves and continues to grow, McColl's is in a strong position to benefit.
"We remain confident that our standing as a leading neighbourhood retailer will allow us to continue to achieve further progress against our strategy and deliver sustainable returns for shareholders."