Morrisons Supermarkets close to disposal of convenience stores estate

Wm Morrison Supermarkets is close to completing the surprise disposal of its convenience stores arm after a review into the small stores business.

Morrisons new chief executive David Potts, who took the reins in March this year, has decided to make the move after his predecessor Dalton Phillips was slow to spot the recessionary consumer trend towards smaller shops.

The North of England focused supermarket is now locked in exclusive disposal talks to sell the 'M local' stores with Knightsbridge investment firm Greybull Capital, according to the Sunday Telegraph.

The paper said it was not known what will happen to the shops or their employees if a deal is completed with the Knightsbridge-based family office, which is run by brothers Marc and Nathaniel Meyohas.

But Greybull are working with a team of executives in a buyout-style deal that could be unveiled in the coming weeks.

At the time of final results in March, Morrisons said it would conduct a review the 'M local' proposition, as well as slowing the rate of new convenience openings significantly in order to allocate more capital to maintaining and updating its core estate.

At the company's 1 February year end, after opening 57 and closing six in the preceding 12 months, had a total of 153 convenience stores.

"Convenience is a channel that we expect will continue to grow in future," the company said at the time. "Over recent years, we have been working to grow M local at pace in order to quickly gain critical mass and learn. However, for stores now in their second year, we are not seeing the level of trading performance we had anticipated. "

Greybull, which is known for rescuing Monarch Airlines and backing attempted buyouts for Comet and Game Group, is said to be in talks to buy 150-160 stores.

The convenience estate made between £250m and £350m in sales for Morrisons in the last financial year.