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Sluggish new year for McColl's

The retailer's full-year earnings have come in slightly below expectations, and current trading appears weak.
March 3, 2015

Although McColl's Retail's (MCLS) chief executive, James Lancaster, hailed a "record performance", shares in the convenience chain sank 10 per cent as full-year earnings came in 2 per cent below expectations. The retailer also revealed that the new financial year had got off to a slow start: like-for-like sales in the first 13 weeks were down 1.2 per cent.

IC TIP: Hold at 154p

This means the group may operate with negative organic sales growth for some time, according to Numis Securities. The broker downgraded its cash profit forecasts for 2015 by 6 per cent to £37.5m, giving EPS of 16p.

Still, 2014 was still a robust year for McColl's in light of the well-documented problems in the food retail sector. Like-for-like sales rose 0.7 per cent and adjusted operating profit increased by 11 per cent to £25m.

The expansion strategy also continued as McColl's acquired 60 stores. The 800th convenience shop was unveiled in December, after the period-end, and the group remains on track to hit its 1,000 store target by 2016. Post Office conversions were completed ahead of schedule, too. Mr Lancaster said the market was challenging, but "full of opportunities".

MCCOLL'S RETAIL GROUP (MCLS)
ORD PRICE:154pMARKET VALUE:£161m
TOUCH:152-157p12-MONTH HIGH:200pLOW:154p
DIVIDEND YIELD:5.5%PE RATIO:15
NET ASSET VALUE:112p*NET DEBT:32%

Year to 30 NovTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2011**80510.5nana
2012**84513.3nana
20138694.46.9nil
201492212.610.28.5
% change+6+188+48-

Ex-div: 30 Apr

Payment: 29 May

**Pre IPO figures

*Includes intangible assets of £139m, or 133p a share