Subscriber login Close [x]
remember me
You are not logged in.

Morrisons reportedly close to sale of M Local c-stores

Published:  17 August, 2015

Morrisons is reported to be closing in on a sale of its M convenience stores to a mystery team of industry executives funded by Greybull Capital.

Morrisons is reported to be closing in on a sale of its M Local convenience stores to a mystery team of industry executives funded by Greybull Capital.

A report in the Telegraph describes the talks as "advanced" and says that Greybull - which last year rescued Monarch Airlines from bankruptcy - was the only name in the frame to buy the shops, the future of which Morrisons said was up for review earlier this year.

Morrisons has already closed 23 convenience stores, leaving around 160 to form part of any sell-off package.

The chain entered the convenience market later than its main multiple grocery rivals and has struggled to compete for prime and cost effective sites.

The Telegraph said the Greybull deal would provide finance for the acquisition and substantial working capital for the stores.

Morrisons posted an annual loss of £792 million in March and new chief executive David Potts announced 720 head office jobs cuts in April.

Ken Odeluga, senior market analyst at City Index, said: "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.

"Morrisons 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."

Keywords: