Co-op plans sale of 298 food shops to rival McColl’s - but staff are safe
- Credit: PA
The Co-operative group plans to sell off nearly 300 stores to a rival firm as it looks to overhaul its retail footprint across the UK.
The mutual said the £117 million deal will see 298 smaller food stores snapped up by McColl's Retail Group, with money from the sale used to buy 100 new stores this year and 100 more stores in 2017.
The only store in Norfolk and Suffolk to be affected is in Harleston, the chain said.
The move, which is subject to approval from regulators and McColl's shareholders, will also see 3,808 Co-op staff transferred to McColl's as part of a TUPE agreement.
Steve Murrells, chief executive of Co-op Food, said: 'Today's announcement is completely in line with our strategy, as these stores did not allow us to provide a sufficiently compelling own-brand offer for our members going forwards.
'The proceeds will be re-invested to drive sustainable growth for our members and I'm delighted that all 3,808 colleagues will transfer to McColl's on the same terms and conditions.'
The Co-op said it was selling the stores, which are 1,700 sq ft on average, because they are too small to stock all of its own-brand products which have been key to driving up sales.
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It said the move tied in with plans to grow the total number of Co-op members to a million by 2018, while pushing up the total sales from members to 50%.
The mutual said like-for-like sales growth in its convenience estate hit 4% in the year to April, while like-for-sales across its food stores in the 52 weeks to January 2 rose by 1.6%.
McColl's said the cash deal for the stores would be part funded by raising around £13.1 million from placing 10.5 million shares to new and existing investors.
Jonathan Miller, chief executive of McColl's, said the acquisition of the new stores would 'substantially' accelerate its growth strategy.
He added: 'These stores are profitable, well invested, and the perfect size for our operating model. We expect the transaction to be significantly earnings enhancing for our shareholders.'