Morrisons to sell M-Local convenience stores, Telegraph reports
17 August 2015 | 0
Morrisons is gearing up to offload 160 M-Local convenience stores, according to a report in The Telegraph this weekend.
The Telegraph stated the UK’s fourth largest supermarket was in “advanced talks” with investment firm Greybull Capital, which will provide tens of millions of pounds to fund the takeover and provide the stores with working capital.
Morrisons declined to comment on the story. However chairman Andy Higginson previously said that more than 30% of its convenience stores had not worked. The supermarket confirmed plans to shut more than 20 M-Local stores earlier this year.
Morrisons’ shares dipped by approximately 1.5% in early trading.
Ken Odeluga, a senior market analyst at www.cityindex.co.uk, told ShelfLife how the development is likely to affect the markets going forward.
“Morrisons is not obliged to specify how much it earns from its convenience store business and even if as its cash flow statements suggest, it makes a modest income from it, for the sake of focus and reallocated operating expenditure, there’s a fair argument to end the venture,” Odeluga said.
“MRW had more than 1,000 stores by the time of its last full-year report, but its operating margin slipped 0.5% into the red at end 2013 and was -4.7% at the end of its last fiscal year. Operating cost reduction is therefore a higher priority than marginal profit contribution, especially as total liabilities edge ever closer to 1:1 level against equity value.”