City's all ears as Bargain Booze becomes a PLC
It’s not so long ago that all the chatter about Bargain Booze was whether it was destined for a sell-off and who would be brave enough to take it on.
Despite turning a profit of £13.2 million the chain faced an uncertain future two summers ago when its then owner, ECI Partners, enlisted accountants KPMG to run a rule over its books and report on the likelihood of finding a suitor if it hung up the “for sale” sign.
At the time, varying figures as to its value were bandied about up to a ceiling of around £100 million, but a deal never materialised. This raised questions about its viability among the trade, who feared the worst having witnessed the demise of First Quench.
The departure of long-standing managing director Matthew Hughes, who recently resurfaced at rival Rhythm & Booze, did little to allay concerns that the chain could be in trouble. Fellow managing director Tim Stanley was next out the door, leaving the businesses without a chief for six months.
Waitrose’s former head of convenience, Diana Hunter, took the reins in January and, in just seven months, has implemented a dynamic shake-up of the company, including the move to a PLC. With a new set of backers and unprecedented interest in its shares pushing their price significantly higher than expected, Bargain Booze has engineered a new landscape of possibility for itself.
Debt-free and with cash to spend on expansion, refits and concept stores, the chain, which has often been seen as the misnomer of the drinks retailing world – misunderstood and pigeonholed by those in the south where it has so far failed to venture with any real impact – is on a roll. A full-scale national expansion programme means the 611-strong chain looks set to become an even bigger force in the market. Certainly Hunter’s ambitions are not without their challenges. In its latest financial accounts it netted profits of £6.6 million, a worrying dip on previous performances. But, if its management team can succeed in convincing its sometimes disparate franchisees there is a shared benefit in embracing the new era of change, she will be well on track to realising its goals.
With Majestic setting a shining example of what can be achieved through the same financial model, investors have a greater sense of security about what they are backing.
One thing’s for sure, if the City begins to gain confidence in the returns drinks retailing can offer, the playing field opens up for other entrepreneurs to seek funding for their big ideas, reinforcing the message that, operating correctly, retailers in this market are capable of delivering attractive returns.