Bargain Booze owner to call in administrators
Conviviality, the parent company of retailers Bargain Booze and Wine Rack, has announced plans to appoint administrators after failing to raise emergency funds, putting its 700 UK stores and its operations base at Runcorn under threat.
The company’s board has announced plans to place the business into administration, with the loss of up to 2,500 jobs, following the conclusion of discussions with its banks on 28 March, where it had hoped to raise £125m.
Shares in the firm, which trades on the Alternative Investment Market, have been suspended.
The news comes at the end of a nightmare month for the firm, which issued a profit warning after discovering it had a £30m unpaid tax bill. Chief executive Diana Hunter also stepped down in March.
Alongside its retail brands Conviviality has supplied other well-known chains including JD Wetherspoon and Mitchell and Butlers.
The firm has 700 stores across the UK, with operations in Runcorn and Newcastle-under-Lyme.
In a statement to shareholders Conviviality said: “Unless circumstances change, and in accordance with statutory requirements, the Board intend to appoint administrators within 10 business days. The secured creditors can, however, appoint administrators without the requirement for notice.
“The directors intend to allow the business to continue to trade and the company continues to work alongside advisers in order to preserve as much value as possible for all stakeholders as it explores a number of inbound enquiries regarding a potential sale of all or parts of the business.”
In October last year Bargain Booze’s headquarters in Crewe was sold to investor AEW for £10.4m.
According to the firm’s latest annual report, Conviviality boasted revenues of £1.6bn in 2017, up 85% from the previous year.
Molly Johnson-Jones Retail Analyst at GlobalData said: “At a time of tough trading conditions when companies need to focus on their best performing core areas, Conviviality took its eye off the ball in search of new growth. Add in the accounting errors and hidden margin erosion and we can see the reasons for Conviviality’s demise.’
“The high levels of cost inflation and restricted consumer spending has separated the wheat from the chaff in retail after an extended period of unfettered expansion and a lack of rigorous cost control in the retail industry, even in the seemingly more resilient food and grocery sector.
“The numerous accounting errors and misjudgements suggest poor management oversight, and Conviviality’s demise adds to the long list of retailers such as Toys R Us, Maplin and Warren Evans that have lacked the consumer relevance and management ability and agility to weather the storm.”