Morrisons is to close 132 unprofitable McColl’s stores, putting 1,300 jobs at risk, months after winning a bidding war to buy the struggling convenience store chain.
The UK’s fifth-biggest supermarket chain, which beat Asda’s owners to buy the retailer’s 1,164 stores and kiosks after it went into administration earlier this year, said that despite the cuts, believed the business had “strong potential”.
McColls, which was started by Scottish footballer Robert Smyth McColl in 1901 with a single store in Glasgow, now has stores across Britain.
“We deeply regret the proposed closure of 132 loss-making stores, but it is unfortunately an important step towards the regeneration of the business,” said Joseph Sutton, head of convenience, online and wholesale at Morrisons. “We have a lot of work to do, but there is no doubt that McColl’s is a business with great potential.”
The closures come after Morrisons, which lost its place as the UK’s fourth-largest grocer in September when it was overtaken by Aldi, revealed its profits had fallen by 50% this summer as it battled ” “unprecedented inflationary pressures” to its domestic food processing. arm
Supermarkets face higher prices from grocery suppliers and rising labor and energy costs just as shoppers cut spending on non-essentials while coping with rising inflation in electricity and gas bills, mortgages, rent and food.
Convenience stores also face competition from delivery services such as Deliveroo, JustEat and Getir, which expanded rapidly during the pandemic. The UK’s biggest grocer Tesco is also expanding, adding three new checkout-free stores this week in London and Birmingham.
Morrisons is believed to be under further pressure from rising borrowing costs after debts rose from £3.2bn in January 2021 to £6.8bn a year later to fund the takeover deal last year by US private equity firm Clayton, Dubilier & Rice.
The company said it would delay the closure of 55 of the McColl’s stores that house Post Office counters until next year to “allow them to serve their communities over Christmas and give the Post Office extra time to make alternative arrangements”. .
Morrisons also said that all affected staff would be offered alternative employment at a nearby McColl’s or Morrisons store, or at one of its logistics operations or food processing centres.
“We can now begin the urgent journey to transform McColl’s into a viable, well-invested and growing operation,” said David Potts, chief executive of Morrisons.
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Last month, the UK competition regulator cleared the way for Morrisons’ £190m rescue deal to be approved on the condition that it sell 28 McColl’s stores in 35 areas where the two compete retailers McColl’s 16,000 employees were transferred to Morrisons as part of the deal.
Morrisons’ new parent, CD&R, is also the parent company of Motor Fuel Group, which operates more than 800 convenience stores, the vast majority of which are part of its petrol stations.
The supermarket chain says it plans to convert 1,000 McColl’s stores to its Morrisons Daily format within two years, a rebranding exercise it says will boost sales by a fifth, building on the 286 stores it has already rebranded .