Source - Alliance News

Shares in McColl's Retail Group PLC plunged on Monday as it delivered a profit warning for its current financial year, as it continuing to seek funding amid other options to keep the business going.

Shares in the the Brentwood-based convenience store operator were 59% lower at 2.85 pence on Monday in London. They have lost 89% in value over a 12 month period.

For the financial year ended November 28, results are expected to be in line with guidance, with adjusted earnings before interest, tax, depreciation and amortisation set to be around £20 million, down 31% from £29.1 million the year before, and revenue to drop 11% year-on-year to £1.11 billion from £1.25 billion.

However, revenue for the first quarter of McColl's current financial year is behind expectations, due to a material drop in footfall amid the surge in Covid-19 cases upon the emergence of the Omicron variant, particularly over the Christmas period.

Looking ahead, difficult market conditions seen in the first quarter are expected to continue through the first half, leading to McColl guiding for annual adjusted Ebitda to be slightly behind market expectations.

In spite of this, the group registered two-year like-for-like sales growth of 5.9% for the 11 weeks ended February 13, marking a recovery in impulse product sales, its said.

On the financing front, McColl's said it remains on talks with its lending banks for a longer-term agreement relating to the balance of its facility.

Although the group had raised £30 million in September via a placing and open offer to expand its working capital headroom, that headroom has been absorbed by the trading shortfall in the second half of the 2021 financial year.

Looking ahead, McColl's said it will continue to seek a solution to its financing issues. A recent approach to buy the whole business has now been withdrawn, but McColl's said it also has received indications of interest for parts of the business.

McColl's expects to publish its annual results in May to allow added time for banking discussions to conclude.

Copyright 2022 Alliance News Limited. All Rights Reserved.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.