There’s little doubt that this has been a transformative year for retail chain McColl’s (MCLS) as it continues to integrate its acquisition of 298 Co-op stores, but last year’s collapse of wholesaler Palmer & Harvey (P&H) has proved to be quite a distraction. Pre-tax profits, although up by 18 per cent on an adjusted basis, fell short of analyst expectations by around £1.7m, reflecting stock availability issues shortly ahead of P&H’s demise. It has also had a knock-on effect on total like-for-like sales during the first 11 weeks of the new financial year, which were down 2.2 per cent.
Although broker Peel Hunt calls the Palmer & Harvey hit a “one-off”, it has forced fellow analysts at Numis to lower forecasts for the current financial year. Numis now expects pre-tax profits of £27m for the year ending November 2018, giving EPS of 19.1p, compared with £23.2m and 16.2p in FY2017.
But analysts agree that McColl’s has done its best to mitigate the fallout from P&H. The contingency plan involved entering a new short-term supply contract with Nisa for stores previously supplied by P&H, and starting its new supply partnership with supermarket group Morrisons (MRW) earlier than planned.
| MCCOLL'S RETAIL (MCLS) | ||||
| ORD PRICE: | 239p | MARKET VALUE: | £275m | |
| TOUCH: | 235-240p | 12-MONTH HIGH: | 301p | LOW: 175p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 19 | |
| NET ASSET VALUE: | * | NET DEBT: | £142m | |
| Year to 26 Nov | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 0.87 | 4.4 | 6.9 | nil |
| 2014 | 0.92 | 12.6 | 10.2 | 8.5 |
| 2015 | 0.93 | 21.1 | 15.4 | 10.2 |
| 2016 | 0.95 | 17.7 | 12.8 | 10.2 |
| 2017 | 1.13 | 18.4 | 12.3 | 10.3 |
| % change | +19 | +4 | -4 | +1 |
| Ex-div: | 19 Apr | |||
| Payment: | 1 Jun | |||
| *Negative shareholders' funds – the balance sheet includes £249m in intangible assets, or 216p a share. | ||||
