Conviviality Retail to open 55 new stores after posting strong results
Bargain Booze and Wine Rack owner Conviviality Retail plans to open 55 new stores in the year ahead after reporting a 4.4% growth in pre-tax profits for the 2014-15 financial year.
The firm, which has seen its shares suspended after confirming it is in talks to take over on-trade supplier Matthew Clark, reported pre-tax profits of £9.7 million for the year to April 26, 2015.
Group revenue rose by 2.4% to £364.1m, although like-for-like sales dropped by 1.7%.
Chief executive Diana Hunter highlighted a 0.8% growth in franchisee profits in the past two years as cause for celebration, and laid out expansion plans on the back of the results.
She told OLN: “We will be looking to open 50 to 55 stores in the year ahead. Two thirds will be Bargain Booze Select Convenience, with some Wine Rack and Bargain Booze. We are also on the lookout for new and interesting sites for BB’s Warehouse. We haven’t forgotten about that. We will be looking to open another couple.
“We are working with 38 existing franchisees to open new stores.
“In the past year we have had 21 franchisees open new stores and 35 new franchisees. Now revenues are up and EBITDA is up. It shows our strategy is on track and delivering now. We have spent the last two years strengthening our franchisee base, making sure they are more incentivised.”
Convivality has introduced 280 new products in the year, and now stocks 70 premium bottles of ales and 20 craft beers.
But Hunter said she was particularly pleased with the group’s wine performance. Wine now accounts for 15.4% of turnover, up from 13.15 in 2013. “The wine results are very important,” she said. “We want to be seen as a wine destination and we brought in Susan McCraith MW to take on a lot of work on our range.”
The average bottle price for Bargain Booze is £4.50, compared to a UK average price of £5.37, while the average price at Wine Rack is £7.84.
“That is 12% cheaper than Majestic’s average bottle price,” said Hunter. “We think that’s absolutely the right place to be. We purposely positioned Wine Rack as a wine and spirits specialist. We want to be cheaper than Majestic and Waitrose but on a par with the supermarkets. Consumers know they are great quality and value for money. “In Bargain Booze we aim to be 10% cheaper than the supermarkets and we are currently at 12%.”
Hunter is due to meet with franchisees on July 20, and said they should be encouraged by the latest results.
She said: “What’s really important is that profits are up 0.8%. It’s a tough market but we have invested in things like the app and click and collect and margins have gone up 0.8% in the past two years. It’s a difficult market but cash profits have gone up.”