Convenience store operator McColl’s has warned it is likely to enter administration, putting up to 16,000 jobs at risk.
The company, which operates more than 1,200 convenience stores under the McColl’s, RS McColl and Morrisons Daily brands, has been in talks with lenders for some time and this week said its shares would be suspended from June 1 as it could not file annual results on time.
“Whilst no decision has yet been made . . . unless an alternative solution can be agreed in the short term, it is increasingly likely that the group would be placed into administration with the objective of achieving a sale to a third-party purchaser,” it said in a statement late on Thursday afternoon.
“Even if a successful outcome is achieved, it is likely to result in little or no value being attributed to the group’s ordinary shares,” it warned. The shares fell 12 per cent to around 1p, giving the group a market value of just £3mn.
Convenience stores enjoyed strong trading in the early stages of the coronavirus pandemic, when consumers preferred not to travel too far from home, but have since reverted to their traditional function of small top-up shops.
McColl’s was valued at around £200mn when it floated in 2014, but found it hard to compete with larger players such as Tesco, J Sainsbury and Co-op.
It was hit hard by the collapse of its wholesale supplier Palmer and Harvey in late 2017, though a hurriedly arranged partnership with supermarket chain Wm Morrison appeared to offer hope.
The Morrisons Daily format has proved more successful than its own outlets and the company was in the process of converting hundreds more sites to the fascia.
Morrison’s has been touted as a potential buyer of McColl’s assets, having previously withdrawn from operating convenience stores directly. It is a substantial creditor to the group, but declined to comment on its position.
Asda, which also has no convenience operation of its own, is another possible acquirer.
News of the pending administration was first reported by Sky News.