PwC named for McColl's administration
British convenience retail chain McColl’s has announced its intention to appoint administrators from PwC. The professionals will now seek to confirm a buyer for the company, and preserve thousands of jobs across the UK.
With a nationwide network of corner-shops, McColl's is one of Britain’s leading neighbourhood retailers. Its 1,265 convenience stores and newsagents across England, Scotland and Wales includes franchises trading under the names Morrisons Daily and McColl's, Martin's and RS McColl – also operating post offices in several stores.
While grocers were one area of retail which proved relatively resilient in the lockdown months, McColl’s was not so fortunate – as the pandemic came at a time when it was shifting its business model. McColl’s was moving from running traditional convenience stores to selling more fresh produce in a partnership with Morrisons – and stores where this had already happened performed strongly, as shopping habits shifted to buying more locally in the coronavirus crisis. However, the rest of the chain lacked investment, and only a small proportion of its stores had made the shift.
Then, at the end of 2021, it emerged that McColl’s, along with a number of other retailers, also faced allegations from the government that it had failed to pay some of its workers the UK minimum wage. McColl's, Pret and Welcome Break said the underpayments were historic errors and staff had been swiftly reimbursed. The businesses were made to pay back the money as well as being fined £3.2 million over breaches, such as deducting pay from wages for uniforms and expenses, or failing to pay the correct apprenticeship rate.
Amid this, McColl’s has spent the first half of 2022 scrambling for fresh funding, with Sky News reporting that Morrisons recently proposed a deal to McColl's lenders which involved injecting funds into the struggling retailer. However, in the end, no deal materialised, and the board were left with no alternative but to file for administration.
A statement from McColl’s read, “While the constructive discussions with the company’s key wholesale supplier to find a solution with them to the company’s funding issues and create a stable platform going forward had made significant progress, the lenders made clear that they were not satisfied that such discussions would reach an outcome acceptable to them. In order to protect creditors, preserve the future of the business and to protect the interests of employees, the board was regrettably left with no choice other than to place the company in administration.”
The firm installed PwC as administrators, in the expectation that they intend to implement a sale of the business to a third-party purchaser as soon as possible. Following McColl’s announcement, Sky News reported that supermarket chain Morrisons and EG Group had made their final bids for the retailer. The improved offer to McColl’s lenders would repay the lenders immediately in full, meeting their primary demand.
Mark James Tobias Banfield, Robert Nicholas Lewis and Rachael Maria Wilkinson of PwC will now work as administrators, hoping to expedite such a deal. With some 16,000 jobs currently at risk, swift action will be essential to maintaining the company’s headcount.
