Martin Retail profits slump but its shops estate grows

LOWER income from sub-post offices and the loss of higher-margin hospital shops have caused operating profits to fall at Martin Retail Group (MRG), which runs nearly 500 newsagents under the RS McColl and McColl's brands.

Operating profits at the Glasgow-based firm - which forms part of Essex-based Martin McColl Retail Group (MMRG) - fell by 23 per cent to 7.7 million in the year to 28 November, according to accounts filed at Companies House.

Pre-tax profits more than halved from 19.5m in 2009 to 9m in 2010, although the 2009 figure had been boosted by the 9.6m sale of 16 non-core but higher-margin shops in hospitals.

MRG closed or sold five loss-making or marginal stores during 2010 to take its estate down to 483 shops, including 140 convenience stores. Like-for-like sales dropped from 294.5m to 289.8m after the store closures.

The group did not return calls requesting comment yesterday, but in the directors' report company secretary Jonathan Miller said: "We are pleased with the company's financial performance for the period in a difficult economic environment."

Staff numbers in Scotland fell from 4,399 to 4,241, and the wage bill decreased from 39.6m to 38.2m. On a UK level, accounts for MMRG - which uses the Martin's brand south of the Border - showed sales from continuing operations rose by 2 per cent to 771.3m over the same period.

The group closed or sold a total of 20 loss-making or marginally profitable stores last year, but bought 39 individual convenience stores, taking its total estate from 1,252 to 1,271.

The number of convenience stores within the overall group rose from 508 to 548, in keeping with the firm's strategy to concentrate on its grocery shops.

Pre-tax profits dropped from 21.6m in 2009 to 4.9m in 2010. The sale of 27 hospital stores in 2009 for 19.1m had bolstered the bottom line.

Operating profits from continuing operations fell from 19.7m to 16.9m following lower income from the firm's sub-post offices and depreciation costs associated with its new tills system, which has now been rolled out across Great Britain.

The highest-paid director - presumed to be chairman and chief executive James Lancaster - fell from 812,000 in 2009 to 739,000 in 2010. No dividend was declared. UK staff numbers edged up from 12,005 to 12,090, with the wage bill rising from 106.9m to 107.8m.

The group traces its origins to Glasgow, where its first store opened in 1901. Forbuoys bought Martin Retail Group in 1998 to create TM Retail and went on to buy Dillon stores in 2004.Bank of Scotland (BoS) backed a 165m buy-out from private- equity investors Montagu and Electra Partners in 2005, at which point the firm changed its name to MMRG and began using its three current brands.

Lloyds Banking Group, which took over BoS, sold its investment in MMRG to Coller Capital last year as part of a 332m deal.