Shares in retailer McColl’s (MCLS) halved to 2p on Monday after the indebted convenience store operator issued yet another earnings alert and warned that its equity may be worthless.
The ‘community retailer’ said it is discussing a financing solution with its lenders and key commercial partner Morrisons to resolve its short-term funding issues, though the cash-strapped company added ominously: ‘It should be noted that even if such a successful outcome is achieved it is increasingly likely to result in little or no value being attributed to the group’s ordinary shares.’
NO EASTER RISING
Embattled McColl’s warned that for the current year ending in November, adjusted EBITDA or earnings before interest, tax, depreciation and amortisation, will be ‘no higher’ than the £20 million it posted in full year 2021.
This follows a weaker than expected Easter performance with cost inflation pressures continuing to compress margins.
Though the Brentwood-based retailer’s recovery in trading performance continued during the first half of March, Easter was ‘impacted by reduced consumer spending and continued supply chain disruption across the industry’.
McColl’s said it is seeking to mitigate product availability issues caused by ongoing supply chain issues.
MORRISONS DAILY DELIVERS
Despite all these problems, the company insisted its Morrisons Daily stores continue to perform strongly, delivering like-for-like sales growth that is dramatically better than non-converted, comparable stores and ahead of the total convenience market.
Due to the ongoing financing discussions, McColl’s expects to delay the release of its full year results beyond the end of May, the deadline under London listing rules, which would result in trading in its shares being suspended.
Back in February, McColl’s shares cratered after it posted yet another profit warning and confirmed that a bid for the whole business had been withdrawn.
The following month, Jonathan Miller resigned as CEO. He was replaced by chief operating officer Karen Bird on an interim CEO basis.
