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RNS Number : 5715Y

Morrison(Wm.)Supermarkets PLC

09 September 2015

9 September 2015

Morrisons to sell 140 M local convenience stores

Morrisons has agreed to sell 140 M local convenience stores for a consideration of c.GBP25m in cash, to a team led by retail entrepreneur Mike Greene and backed by Greybull Capital LLP. Morrisons will retain five M local stores, which are either on forecourts or will be converted to small Morrisons supermarkets.

In March 2015, Morrisons announced a review of the M local business. That review concluded that M local would have required significant further investment in new sites, plus additional capital expenditure and lease commitments, to reach profitability. In the Board's opinion, today's sale announcement represents the best solution for Morrisons and will enable future Morrisons investment to be focused on core supermarkets.

Morrisons expects to incur a loss on disposal of around GBP30m. In addition, Morrisons retains a guarantee on individual lease obligations, which could revert to Morrisons if the new business does not succeed. The residual contingent liability in this event is estimated at up to GBP20m.

In 2014/15, the M local stores to be sold recorded an operating loss(1) of GBP36m, and gross assets(2) were GBP68m. For 2015/16, the stores' budgeted operating loss(1) was GBP23m.

David Potts, Morrisons CEO, said: "Convenience is a large and growing channel in UK food retailing. Morrisons learnt much from its entry into the market, but M local was unable to scale. However, we remain open to other opportunities in convenience in the future. I would like to thank all the Morrisons colleagues for their hard work and dedication to M local."

- Ends -

Enquiries:

Wm Morrison Supermarkets plc

 
Andrew Kasoulis   Investor Relations   07785 343515 
Julian Bailey     Media Relations      07969 061092 
 
 

Citigate Dewe Rogerson

 
Simon Rigby   Media Relations   020 7282 2847 
Kevin Smith   Media Relations   020 7282 1054 
 

Notes

 
 1   EBIT excluding profit/loss relating to property, impairment 
      and provision for onerous contracts 
 2   Gross assets includes stock transferred as part of 
      the transaction and fixed assets at net book value 
      as at last reported balance sheet date (1st February 
      2015) 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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September 09, 2015 09:08 ET (13:08 GMT)