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Bargain Booze firm Conviviality close to administration Bargain Booze firm Conviviality close to administration
(35 minutes later)
Conviviality, the owner of Bargain Booze, has announced plans to file for administration within two weeks.Conviviality, the owner of Bargain Booze, has announced plans to file for administration within two weeks.
The firm also owns Wine Rack and supplies more than 25,000 restaurants, hotels and bars.The firm also owns Wine Rack and supplies more than 25,000 restaurants, hotels and bars.
It has issued profit warnings in recent weeks and revealed a £30m tax bill. The company sought £125m from investors but said it had been unable to raise those funds.It has issued profit warnings in recent weeks and revealed a £30m tax bill. The company sought £125m from investors but said it had been unable to raise those funds.
Conviviality employs about 2,500 staff and their jobs are now in jeopardy.Conviviality employs about 2,500 staff and their jobs are now in jeopardy.
Earlier this month, the company slashed its forecast for underlying earnings this year to £55m from £70m.Earlier this month, the company slashed its forecast for underlying earnings this year to £55m from £70m.
Just days later, on 14 March, it revealed a £30m tax bill that had to be paid by the end of the month.Just days later, on 14 March, it revealed a £30m tax bill that had to be paid by the end of the month.
Those revelations prompted the resignation of chief executive Diana Hunter, who had been in charge since 2013, the year Conviviality listed on the London Stock Exchange.Those revelations prompted the resignation of chief executive Diana Hunter, who had been in charge since 2013, the year Conviviality listed on the London Stock Exchange.
'Fallen short'
Under her leadership the company expanded rapidly.Under her leadership the company expanded rapidly.
Its core business had been selling popular alcohol brands at rock bottom prices, but in 2015 Ms Hunter took the firm into the wholesaling of drinks with the purchase of Matthew Clark.Its core business had been selling popular alcohol brands at rock bottom prices, but in 2015 Ms Hunter took the firm into the wholesaling of drinks with the purchase of Matthew Clark.
It also went upmarket with the purchase of wine specialist Bibendum.It also went upmarket with the purchase of wine specialist Bibendum.
That created a strong business model according to Phil Carroll, a research analyst with investment firm, Shore Capital.
But he said management of the company's operations had "fallen short".
In particular the wholesale business had struggled to "get price increases to stick" and profit margins had suffered, according to Mr Carroll.
The rapid demise of ConvivialityThe rapid demise of Conviviality
As recently as 29 January Conviviality management was buoyant. Announcing half-year pre-tax profits of £7.4m chief executive Diana Walker celebrated the company's "strength" and "above market growth".As recently as 29 January Conviviality management was buoyant. Announcing half-year pre-tax profits of £7.4m chief executive Diana Walker celebrated the company's "strength" and "above market growth".
However, the first sign of trouble came a little over a month later, on 8 March. The company warned that profits would be 20% below market expectations. It blamed an error in its forecasts and weaker profit margins.However, the first sign of trouble came a little over a month later, on 8 March. The company warned that profits would be 20% below market expectations. It blamed an error in its forecasts and weaker profit margins.
Then, on 14 March, it revealed a £30m tax bill that had to be paid by the end of the month. It entered discussions with its lenders and looked at raising funds on the stock market.Then, on 14 March, it revealed a £30m tax bill that had to be paid by the end of the month. It entered discussions with its lenders and looked at raising funds on the stock market.
By 28 March the game was up. An effort to raise £125m from shareholders failed. A day later Conviviality announced its intention to call in the administrators.By 28 March the game was up. An effort to raise £125m from shareholders failed. A day later Conviviality announced its intention to call in the administrators.
From the first sign of trouble to failure took just 21 days. From the first sign of trouble to the brink of failure took just 21 days.
High Street stress Potential suitors
Conviviality had been trying to raise £125m to keep the business going, but on Wednesday it announced that those attempts had failed.Conviviality had been trying to raise £125m to keep the business going, but on Wednesday it announced that those attempts had failed.
In its latest update, the company said: "Unless circumstances change, and in accordance with statutory requirements, the Board intend to appoint administrators within 10 business days.In its latest update, the company 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 secured creditors can, however, appoint administrators without the requirement for notice."
Conviviality said it would continue to trade and was exploring "a number of inbound enquiries regarding a potential sale of all or parts of the business".Conviviality said it would continue to trade and was exploring "a number of inbound enquiries regarding a potential sale of all or parts of the business".
The collapse of Conviviality is the latest sign of stress in the retail and hospitality sectors. Mr Carroll says that brewers and perhaps food retailers would be interested in buying all, or part of Conviviality.
Last week, fashion chain New Look said it would close 60 stores and cut 1,000 jobs, and restaurant chain Prezzo announced that a third of its restaurants would close. In particular, the Matthew Clark wholesale business and Bibendum wine specialist could attract buyers.
At the end of February the UK arm of Toys R Us went into administration. The collapse of Conviviality is the latest in a series of retailers to run into trouble.
Last week, fashion chain New Look said it would close 60 stores and cut 1,000 jobs. At the end of February the UK arm of Toys R Us went into administration, and earlier this month it announced all of its stores would close.