WM Morrison Supermarkets PLC (LON:MRW) and McColl’s Retail Group PLC (LON:MCLS) have extended their partnership.
Over the next three years, 300 McColl's convenience stores will be converted to the Morrisons Daily format, offering a full Morrisons convenience range and changing brands.
This rollout follows over 30 McColl's to Morrisons Daily conversions in recent months.
McColl's said the Morrisons Daily stores have consistently delivered the strongest like-for-like sales performance within its estate, driven by the higher mix of grocery sales, breadth of offer and value proposition.
The supermarket chain will be McColl's only wholesale supplier until 2027 after extending the agreement by three years.
The ‘neighbourhood’ retailer also announced new banking arrangements consisting of a £100mln revolving credit facility and an amortising £67.5mln term loan.
Analysts at Peel Hunt upgraded the stock to ‘buy’ from ‘add’ as the wider rollout is “tremendous news for McColl’s”.
“It is clear that the Morrisons brand resonates far more with UK shoppers and the only surprise to us is that it has taken so long for the companies to alight on a solution that allows the rebadging to move from 31 to 300 stores over three years,” the broker commented.
“McColl’s has also refinanced today, which is helpful, and even if current trading is not inspiring (no change to forecasts), the news on Morrisons Daily certainly is: one day we expect the majority of the stores to carry this logo. The shares could easily double.”
McColl’s shot up 13% to 26.8p while Morrisons rose 1% to 171.75p on Monday late morning.