McColl's tumbles on profit warning

The company said it now expects earnings before interest, taxes, depreciation and amortisation of £35m for FY18 compared to a previous estimate of £44m. The company said that in the last 12 months, following the collapse of Palmer & Harvey, it has experienced "significant" supply chain disruption and has needed to accelerate the rollout of Morrisons supply to 1,300 of its stores.

"The speed of this transition has created significant challenges and severely disrupted our plans for the launch of Safeway," it said. "We are extremely grateful for Morrisons’ support during this period, and whilst the transition is now complete, we are continuing to experience a number of challenges. We are working together to address these issues and to develop an optimal range and promotional offer for the future."

The group said total revenue was down 0.5% in the fourth quarter, but up 8.3% for the year to 25 November, reflecting the annualisation of the 2017 acquisition.

Meanwhile, total like-for-like sales were flat in Q4, which was an improvement on the third quarter thanks to a strong performance from tobacco. Full-year LFL sales down were down 1.4% and McColl's said year-end net debt was "materially" lower than expected at around £100m.

The company said that managing cost pressures will continue to be critical, with the most significant being an increase in the National Living Wage.

"To improve efficiency we are investing in systems and processes, alongside our programme of estate optimisation. We also expect continued uncertainty for consumers which will require us to demonstrate further competitive retail pricing," it said.

As a result, it now expects adjusted EBITDA for FY19 to be no more than a "modest" improvement on FY18.

Chief executive Jonathan Miller said: "2018 has been a very difficult year for the business, marked by unprecedented supply chain disruption and ongoing challenges. I am, however, extremely grateful for the continued hard work of all my colleagues and the ongoing support of Morrisons.

"Looking ahead, we expect competition in the grocery retail sector to remain intense and we face into significant cost pressures. Important to our future success will be continuing to develop our partnership with Morrisons, alongside our plans to enhance our neighbourhood convenience offer by improving the quality of our estate and our overall customer experience."

Peel Hunt said the update was "disappointing" and "forecasts must fall dramatically".

"LFL at the headline level for Q4 is pleasing at flat but the main driver of that has been strong tobacco sales, which are not good for the margin. Elsewhere, it is clear that whilst Morrisons has done a good job in replacing P&H, there remain issues: the Safeway range has not evolved and availability is still below historic levels."

At 0910 GMT, the shares were down 24% to 90.19p.