LONDON: British convenience store chain McColl’s went bust Friday in the wake of supply strains and weak consumer spending as inflation soars, putting at risk around 16,000 jobs. McColl’s, which has about 1,100 stores across the UK selling food and household products, entered administration, whereby a troubled company calls on outside help to try and minimize job losses.
McColl’s said in a statement that its main lenders had refused further funding. A last-ditch rescue attempt by supermarket giant Morrisons failed. “We put forward a proposal that would have avoided… administration, kept the vast majority of jobs and stores safe, as well as fully protecting pensioners and lenders,” Morrisons said in a statement.
“For thousands of hardworking people and pensioners, this is a very disappointing, damaging and unnecessary outcome.” McColl’s operates about 200 of its stores under the ‘Morrisons Daily’ brand. “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,” McColl’s said. PricewaterhouseCoopers has been appointed as administrators.
McColl’s said it expected PwC “to implement a sale of the business to a third-party purchaser as soon as possible”. The group’s share price was suspended on the London Stock Exchange prior to the announcement. In early trading Friday, its market value shot up on hopes of a rescue deal.
McColl’s last month revealed in a trading update that the company was being “impacted by reduced consumer spending and continued supply chain disruption across the industry”. Friday’s developments come as Britain faces a cost-of-living crisis, with UK annual inflation sitting at seven percent, or 30-year high. The Bank of England on Thursday warned that British inflation would top 10 percent, a four-decade high, by the end of the year, fuelled by soaring energy prices.
And the BoE added that Britain risks falling into recession, as the central bank raised its main interest rate by a quarter point to one percent-the highest level since the global financial crisis in 2009. The Federal Reserve meanwhile on Wednesday raised US interest rates by half a percentage point as inflation soars also in the world’s biggest economy.
Consumer prices are surging worldwide on supply strains as economies reopen from pandemic lockdowns-and in the wake of the Ukraine war that is aggravating already high energy costs. Britain’s cost-of-living crisis is meanwhile being blamed in part on British Prime Minister Boris Johnson’s Conservative party losing control of key London councils in local elections Thursday. – AFP