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Snacks, crisps and beer shortages have hit sales and profits at Morrisons Daily store operator McColl’s Retail Group as it battles mounting supply chain problems.
The convenience store firm saw its shares plunge by more than a quarter as it warned over annual profits after supply problems with some key products led to “significantly” lower sales than expected in its fourth quarter.
It said snacks – such as crisps, beers, wines and spirits – were among the products hit hardest by the supply chain crisis.
McColl’s blamed shortages of HGV drivers and workers at distribution centres, with supply chain disruption having “intensified” in recent months.
It said the sales blow came despite working with its wholesale partner, supermarket chain Morrisons, to try and lessen the impact.
McColl’s now expects full-year underlying earnings to be between £20 million to £22 million, down sharply on the £27 million expected in the City and the £29.1 million reported a year earlier.
The group said: “As has been well publicised, external factors, including the ongoing nationwide shortage of delivery drivers, labour shortages at distribution centres and insufficient supply of key products, including high margin branded impulse lines, continue to impact the supply chain nationwide and have intensified in the fourth quarter.
“While we continue to work collaboratively with our wholesale partner, Morrisons, to lessen the effect of the disruption, we have been unable to fully mitigate the impact to stores, leading to significantly lower revenues than initially anticipated.”
The group said it was continuing to “monitor the situation” with lending banks, but stressed they remain supportive.
Jonathan Miller, chief executive of McColl’s, added: “It is disappointing to see supply chain issues worsen through the second half, but external factors have not eased, and continue to impact much of the UK economy.
“We are working collaboratively with our wholesale partner Morrisons to restore in-store product availability as quickly as possible.”
Despite the supply chain issues, McColl’s said it is ramping up its store switch to Morrisons Daily and now expects to have more than 150 shops in the format by the end of this month.
It is now ahead of target to reach the 350 Morrisons Daily store milestone.