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Conviviality Retail says Wine Rack bedding down well

Last updated: 11:37 04 Nov 2013 GMT, First published: 12:37 04 Nov 2013 GMT

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The first trading update as a listed company from Bargain Booze off-licence chain owner Conviviality Retail (LON:CVR) merits a small shandy in celebration.

In the 26 weeks to 27 October, the company saw like-for-like sales growth year-on-year of 0.6%, which the company attributed to having got rid of a number of underperforming shops and a general sprucing up of the company’s retail estate.

With a swift half under its belt, the board is looking forward to the second half of the financial year, having performed in line with market expectations thus far.

The recently acquired Wine Rack chain is bedding down well, with the stores trading in line with management’s expectations.

A new Wine Rack branch is set to be opened in West Byfleet in Surrey later this week and this will feature improved point of sale customer communications and refreshed branding. The Wine Rack web site has also been given a freshener, while plans are underway to improve the range and customer experience across all Wine Rack stores before the important Christmas trading period.

Diana Hunter, Conviviality's chief executive, said the board was pleased with the group's performance to date.

"Like-for-like growth in store sales is encouraging and reflects signs of underlying improvement in the core business. This is a result of the increased focus of our franchisees and a better quality store portfolio, combined with a number of new incentives successfully introduced during the period,” she claimed.

Shares in Conviviality were down a halfpenny at 165p at midday, having recovered from an intra-day low of 160.88p.

Conviviality listed on the market on July 1 after a placing of shares at 100p a pop.

The results fell a bit flat as far as Oriel Securities is concerned, especially as the warm summer weather had been helpful.

“LFL sales of 0.6% are uninspiring and we must bring back numbers a shade. Christmas is clearly very important but the current yield is less than 5% and that is not compelling,” the broker said, as it moved its recommendation from ‘add’ to ‘hold’. When the stock came to the market it had a dividend yield of 8%.

Oriel had been looking for LFL sales growth of 4%.

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