Wine sales leap 10% as Bargain Booze operator improves revenue and profit

By Nigel Huddleston

Published: 13 July, 2015

Bargain Booze operator Conviviality Retail has posted a 4.4% increase in pre-tax profits on a rise in revenue of 2.4% in the year to April 26.

Its gross profit margin increased from 9.2% to 10.2% but like-for-like sales were down 1.7%. Wines sales were up 10%.

The store estate - which also includes the Wine Rack shops and Thorougoods convenience stores - grew by 29 outlets to 624, as 21 existing franchisees opened additional stores and 35 new ones joined the group. Chief executive Diana Hunter said a two-year review of its franchisee base to identify stores for closure had come to an end.

Average franchisee profitability increased by 0.8%.

Hunter said: "This is a strong set of results reflecting the hard work of our employees, franchisees and suppliers.

"Franchisees will remain at the heart of our business, as we continue to work together to blend the entrepreneurial skill of the franchisee with the branding, ranging and wholesale expertise of Conviviality.

"Looking forward we will continue to help more of our franchisees grow their existing business while also working to attract new franchisees to the group."

She said north east England, Yorkshire, south west England and Scotland were priority areas for new stores.

Hunter added: "Our pricing policy is to be everyday low promotionally priced,

"On average across our off-licence range we have been consistently 12% cheaper than our competitors in spite of the heavy discounting in the market.

"Value and consistent pricing are important to our customers and they appreciate the transparency of our pricing strategy, which in turns increases customer loyalty."

Trading in Conviviality shares was suspended last week as the company confirmed media speculation that it was in talks to buy on-trade wholesaler Matthew Clark.

Hunter did not comment directly on that move but said in the statement accompanying the results announcement: "During the year ahead we plan to further leverage our wholesale capability into new markets.

"As wholesaler to our franchisees we have built strong relationships with our suppliers and understand the dynamics of this market.

"We have decided to optimise these core skills to create opportunities in new channels such as corporate accounts.

"By operating a delivered wholesale model we can serve a diversity of customers and build our wines and spirits volumes further.

"These higher volumes offer complementary sources of trade which further strength our core business."

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