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Morrisons sells its chain of convenience stores Morrisons sells its chain of convenience stores
(about 1 hour later)
Supermarket chain Morrisons has agreed to sell 140 M local convenience stores for about £25m.Supermarket chain Morrisons has agreed to sell 140 M local convenience stores for about £25m.
It said the buyer was a team led by the retail entrepreneur Mike Greene, funded by Greybull Capital.It said the buyer was a team led by the retail entrepreneur Mike Greene, funded by Greybull Capital.
The shops will be rebranded as "My Local". The 2,300 staff will be kept on, with an extra 200 jobs to be created by reopening 10 shops that are currently closed.The shops will be rebranded as "My Local". The 2,300 staff will be kept on, with an extra 200 jobs to be created by reopening 10 shops that are currently closed.
Morrisons announced a review of its convenience store business in March.Morrisons announced a review of its convenience store business in March.
Earlier this year, Morrisons reported an annual loss of £792m. Earlier this year, the retailer reported an annual loss of £792m.
It now plans to concentrate on its core supermarkets business. It will keep five of its M local shops that are either on petrol forecourts or can be converted into small supermarkets. It now plans to concentrate on its core supermarkets business. Morrisons will keep five M local shops that are either on petrol forecourts or can be converted into small supermarkets.
Analysis: Emma Simpson, Business Correspondent Analysis: Emma Simpson, business correspondent
Convenience stores are the fastest growing format in the UK. So why would Morrisons want to offload this part of its business? It only opened its first M Local in 2011, years later than its rivals who'd already set up shop in prime spots. Convenience stores are the fastest-growing format in the UK. So why would Morrisons want to offload this part of its business? It only opened its first M Local in 2011, years later than its rivals who had already set up shop in prime spots.
Location is key when it comes to convenience. When the former boss, Dalton Philips, took the helm at Morrisons it had had no presence in either convenience or online. The race was on to catch up.Location is key when it comes to convenience. When the former boss, Dalton Philips, took the helm at Morrisons it had had no presence in either convenience or online. The race was on to catch up.
But in their haste they bought stores that weren't always in the right location. For instance it bought 49 former Blockbuster outlets. One retail finance boss told me at the time that he couldn't believe Morrisons had bought the whole lot. But in its haste the company bought stores that weren't always in the right location - such as 49 former Blockbuster outlets. One retail finance boss said at the time that he couldn't believe Morrisons had bought the whole lot.
In March, its new chairman, Andy Higginson, hit the pause button on expansion, saying 30% of them weren't working. He's brought in a new chief executive, David Potts, who's wasted no time in shaking things up. In March, its new chairman, Andy Higginson, hit the pause button on expansion, saying 30% of them were not working. He's brought in a new chief executive, David Potts, who has wasted no time in shaking things up.
So what can Mike Greene do that Morrisons couldn't? He has certainly got bags of expertise. His team is confident it can improve the range and availability of products through more efficient and frequent deliveries. If they fail, it's Morrisons who'll be on the hook for the store leases. So what can Mike Greene do that Morrisons couldn't? He has certainly got bags of expertise. His team is confident it can improve the range and availability of products through more efficient and frequent deliveries. If they fail, it's Morrisons that will be on the hook for the store leases.
Losses from sale Sale losses
Morrisons opened its first convenience store in 2011, but the bulk of them have been open for less than two years.Morrisons opened its first convenience store in 2011, but the bulk of them have been open for less than two years.
They were supposed to boost the supermarket chain's presence in south-eastern England.They were supposed to boost the supermarket chain's presence in south-eastern England.
It expects to lose about £30m on the transaction and will also be remain liable for the leases on the shops if the new business fails.It expects to lose about £30m on the transaction and will also be remain liable for the leases on the shops if the new business fails.
Despite the failure of M local, Morrisons chief executive David Potts said in a statement: "We remain open to other opportunities in convenience in the future." Despite the failure of M local, Morrisons chief executive David Potts said: "We remain open to other opportunities in convenience in the future."
He said the reason M local failed was because it was "unable to scale". They made an operating loss of £36m last year. He said the reason M local failed was because it was "unable to scale". The stores made an operating loss of £36m last year.
Forty-nine of the convenience stores were bought from the administrators of the film rental business Blockbuster. Mr Greene is a former chairman of the Association of Convenience Stores and founded the Association of News Retailing. He chairs or is on the board of several other companies and has considerable experience with convenience stores.
Mike Greene is a former chairman of the Association of Convenience Stores and founded the Association of News Retailing. He chairs or is on the board of various other companies and has considerable experience with convenience stores.
Greybull Capital is the investment firm that last year put up £125m to rescue Monarch Airlines.Greybull Capital is the investment firm that last year put up £125m to rescue Monarch Airlines.
The 10 shops reopening under the My Local brand are:The 10 shops reopening under the My Local brand are: