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)|
|*Negative shareholders' funds – the balance sheet includes £249m in intangible assets, or 216p a share.|