Conviviality Retail half-year profits surge 46%

By Gemma McKenna

Published: 19 January, 2015

Conviviality Retail, owners of Bargain Booze and Wine Rack, has seen half-year profits jump 46.7% on the back of underperforming store closures and strong Christmas trading.

Bargain Booze Bargain Booze sees profits climbGroup owner Conviviality has seen an improved performance in the half-yearly report

The 599-strong estate of franchised off-licences and convenience outlets said profit before tax grew by 46.7% to £3.2 million for the 26 weeks to October 26, 2014. It also saw EBITDA grow by 9.1% to £4.2 million, with gross profit margin moving up by 1.7% to 9.5%.

Its average revenue per store was up 0.7%, buoyed by "improved franchisee performance" with wholesale sales per store up 1.1%. Like-for-like franchisee sales fell 1.7%, but profits were up 6.4%.

It opened four stores in the six month period, and revamped fascias at 50% of its Bargain Booze outlets. Back in May 2014 it bought 26 Rhythm & Booze off-licences in Yorkshire and the north east from Bibby Retail Services for £1.7 million - it says they have now been successfully converted and integrated.

Its trial with Scotmid, signed in November and to be concluded in June 2015, to be its exclusive Scottish franchisee partner - is "progressing well". If successful it will roll out Bargain Booze franchised stores across Scotland.

Wine Rack is expanding in the north, and it recently launched a new app "As If It Wasn't Cheap Enough", which offers additional discounts to customers. More than 2,000 have already signed up.

As for Christmas, in the two weeks to January 4, 2015, it saw sales grow at 2.6% over 2014, with like-for-like franchisee retail sales up 1.2%, and store sales up 2.8% year on year. It said trading was "in line with expectations".

Chief executive Diana Hunter said: "Despite closures of underperforming stores in the period and the integration of the Rhythm and Booze units, sales have been maintained and store numbers have started to grow as we open higher quality outlets.

"We now have a solid platform from which to accelerate franchisee growth, our pilot with Scotmid demonstrates the potential for Bargain Booze to expand throughout the UK, and with our strong balance sheet we have the ability to exploit growth opportunities as they arise."

Mark Brumby, analyst at Langton Capital praised the performance but sounded a note of caution: "It remains to be seen whether this bargain model will be able to continue to grow should the UK supermarkets ramp up their convenience store expansion programmes."

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