Convenience store chain McColl’s hasn’t been pulling in the customers like it used to.
The company revealed yesterday that like-for-like sales had slipped by 2.7 per cent in the six months to May, which it blamed on supply disruptions and the cold snap.
Total revenue was up 19.2 per cent to £601.7m thanks to the 300 convenience stores it hoovered up in 2017.
But profit before tax almost halved from £4.5m last year to £2.3m, while gross margin – the amount McColl’s made from selling items compared to how much it spent buying them – was squeezed from 25.4 per cent to 25 per cent.
Russ Mould, an investment director at AJ Bell, said that the problems caused by weather, and supply chain disruptions from the collapse of wholesaler Palmer & Harvey, would ‘hopefully sort themselves out’. But he added: ‘More worrying is a drop in margins due to cutting prices in order to stay competitive.’
Investors looked panicked – McColl’s shares tumbled 13.8 per cent, or 29p, to 181p. However, the business is fortunately not under financial pressure, Mould added, but shareholders would ‘want reassurance that it is only experiencing short-term pains’.
In the FTSE 100, online groceries retailer Ocado fared better. Its shares rose 5.5 per cent, or 60p, to 1143p as investors continued to plough money into the technology-focused company.
But Ocado’s momentum was not enough to keep the blue-chip index in positive territory.
The FTSE 100 ended the day down 0.3 per cent, or 23 points, at 7655.8 as housebuilders Taylor Wimpey, Barratt Developments and Persimmon weighed on the index. Mining giant BHP Billiton slipped slightly as it revealed it had been hit with another lawsuit, this time in Australia, relating to the Brazil Samarco dam failure that killed 19 people in 2015.
BHP was already facing claims from the Brazilian government and federal prosecutors, and shareholders in the US, but this latest lawsuit has been filed by more than 3000 investors.
They are trying to recover their losses, saying that BHP misled them as to the risk of the dam failure. They estimate the disaster wiped around £14 billion from BHP’s market value. BHP ended the day down 0.2 per cent, or 3.2p, at 1610.2p as the company said it would defend itself against the claim.
Smaller miner Petra Diamonds had an even less sparkling day, as its shares lost 10.6 per cent of their value, or 5.28p, to close at 44.7p.
Though production was in line with expectations, security concerns led to a £27m-to-£34m write-down at the KEM mine it jointly owns in South Africa. Firestone Diamonds was the hotter option, as it reported strong output from its mine in Lesotho, although the average price per carat decreased. The small miner’s share climbed 6.5 per cent, or 0.35p, to 5.7p.
Investment firm Draper Esprit, which has backed companies such as snack box firm Graze and money transfer business Transferwise, jumped on the day of its AGM. It said that since April this year it had invested £29m across eight deals, including call centre software firm Aircall, digital bank Revolut and Finnish microsatellite manufacturer ICEYE.
It also announced a £7m investment in Endomag, a firm pioneering magnetic sensing equipment that helps to fight cancer. Shares rose 4.2 per cent, or 25p, to 620p.
Doctor Who also made an appearance on London’s listed market, as Escape Hunt announced a five-year exclusive licence agreement with BBC Studios to create escape rooms themed around the show.
Investors seemed happy to get locked in, as Escape Hunt shares rose 2.2 per cent, or 2.5p, to 116.5p.