Morrisons says 1,300 McColl’s workers are at risk of losing their jobs

Morrisons has said around 1,300 McColl’s workers are at risk of redundancy as part of proposals to shut 132 loss-making stores at the convenience chain it bought earlier this year.

The supermarket giant sealed a deal to buy its troubled rival for £190 million in a rescue deal in May.

On Tuesday, Morrisons unveiled plans to overhaul the convenience retailer after competition regulators said last week that they were set to clear the takeover.

Morrisons said it expects some McColl’s stores to return to profitability as part of its turnaround plans but highlighted that there are ‘132 stores where there is no realistic prospect of achieving a breakeven position in the medium term’.

Bradford-based Morrisons, which itself was bought in a £7 billion deal last year, said all 1,300 workers at risk from the closure plans will be offered roles elsewhere in the company.

The supermarket group said 55 of the 132 stores earmarked for closure include Post Office counters and will therefore shut next year, following their busy Christmas period.

The supermarket giant has fended off competition from the petrol station operator with an offer that is expected to see McColl’s stores and workforce preserved in their entirety 

The overhaul plan will see Morrisons convert McColl’s stores to its own Morrisons Daily brand.

As part of a previous partnership, 286 of the currently trading 1,164 McColl’s stores are already under the Morrisons Daily banner.

Morrisons said it now plans to convert the ‘substantial majority’ of stores to Morrisons Dailys following a review, with plans to bring the total under the banner to more than 1,000 within two years.

David Potts, chief executive of Morrisons, said: ‘Today marks an important moment for the McColl’s business, colleagues and customers as we formally welcome the business and its colleagues into the Morrisons family.

‘We are now able to begin the urgent journey to transform McColl’s into a viable, well-invested and growing operation.’

David Potts, chief executive of Morrisons, said: ‘We very much regret the proposed closure of 132 loss-making stores but it is, very sadly, an important step towards the regeneration of the business’

Joseph Sutton, Morrisons’ convenience, online and wholesale director, said: ‘We have a great deal of work to do but there’s no question that McColl’s is a business with strong potential.

‘I’m confident that the combination of McColl’s conveniently located stores and great colleagues, together with Morrisons scale, brand, systems and fresh food expertise, will lead to a transformation of the business.

‘We very much regret the proposed closure of 132 loss-making stores but it is, very sadly, an important step towards the regeneration of the business.

‘I am confident that McColl’s can, in the Morrisons family, once again become a growing, thriving and vibrant convenience business serving local communities across the UK.’

In May, Morrisons went head-to-head with the Issa brothers’ EG Group, which owns Asda, in a battle to take over the McColl’s stores. 

McColl’s lenders had rejected an initial offer from Morrisons that would have seen it take on the firm’s debts and repay them over time.

The bid from Morrisons – the sole supplier to McColl’s – would have protected the ‘vast majority’ of staff and stores as well as its £141million pension plan. 

But Morrisons returned three days later with an improved deal that would see the lenders repaid in full immediately, satisfying one of their key demands, although the details are unclear. 

At the time, Morrisons said the win to take over the struggling convenience store chain would help secure the future of 16,000 jobs and 1,100 shops. 

Both Morrisons and the billionaire Issa brothers lodged last-minute bids to take control of the collapsed corner shop chain, which was one of Britain’s largest. 

McColl’s is one of Britain’s biggest corner shop retailers. It had been saved from collapse in May following a dramatic deal with Morrisons

McColl’s went into administration last week after it was unable to repay debts of nearly £100million. 

It sounded the alarm in November over shortages of key products, lorry drivers and distribution centre workers. 

The firm also issued a series of profit warnings and it emerged in February that it was on the brink of collapse. 

The decision to place the group into administration, a key condition of the offer from EG Group, was condemned by Morrisons as ‘disappointing, damaging and unnecessary’. 

Trustees of the company’s pension scheme wrote to the Issa brothers demanding EG Group support its pension commitments, telling them: ‘Any company looking to acquire McColl’s must do the decent thing and ensure that promises made to staff about their pensions are honoured.’ 

The trustees also wrote to then-Business Secretary Kwasi Kwarteng urging him to intervene to ensure the scheme’s 2,200 members are protected. 

Labour’s work and pensions spokesman Jonathan Ashworth urged ministers not to ‘stand by and do nothing’, but to protect the pensions.