Cash call on agenda for Bargain Booze owner Conviviality

Another day, another update from Bargain Booze owner Conviviality, which on Friday raised the prospect of a cash call from investors after two profit warnings and a surprise tax bill.

The retailer admitted it was in talks with accountancy giant PwC to potentially launch an equity fundraising to strengthen its coffers. It also sought to appease investors after a string of blunders.

On Wednesday, Conviviality, led by Diana Hunter, said it was ditching its dividend after it revealed it had to pay an unexpected £30 million tax bill to HM Revenue & Customs by March 29. As a result, shares in the company were suspended and it had to warn on profits again.

The previous week it had warned that its underlying profits were going to be 20% less than expected, wiping more than £300 million off the company’s value.

Conviviality said customers and suppliers “remain” supportive and the HMRC has been “receptive” to its needs. It also expressed its “gratitude” to all stakeholders for their “ongoing support”.

Today’s reassurances are in stark contrast with the retailer’s aggressive growth after it floated on London’s junior AIM in 2013.

Just two months after its listing it gobbled up rival Wine Rack for £1.6 million to increase its foothold in across Britain. It then bought 26 shops from competitor Rhythm & Booze for £1.7 million, followed by the £6 million acquisition of off-licences chain GT News.

There’s more. Its £200 million reverse takeover of drinks wholesaler Matthew Clark in 2015 meant the business had combined sales of more than £1 billion. It also bought Bibendum a year later.

However, in January, the company revealed pre-tax profits fell 13% in the half-year to October 29, mostly because it was trying to keep a lid on costs after it integrated the clutch of businesses it had bought.