Margin pressure at booze pedlar Conviviality PLC (LON:CVR) had the share price going down swifter than a can of Special Brew on Monday morning.
Results for the 26 weeks to 29 October were mixed, with the wholesaler and off-licence stores operator reporting a 9.2% year-on-year increase in revenue to £836.3mln and a 1.7% increase to £23.2mln in adjusted underlying earnings (EBITDA), while the gross margin ebbed to 12.5% from 12.8% and adjusted profit after tax dipped 1.6% to £12.3mln.
The Bargain Booze and Wine Rack chains owner attributed the margin dilution to the increase in sales to large national account customers during the period.
The anaemic EBITDA growth was put down to the phasing of acquisition-based cost synergies into the second half of the financial year.
Net debt at the end of the year had narrowed to £133.3mln from £138.4mln at the end of October.
The interim dividend was increased by 7.1% to 4.5p from 4.2p the year before.
Like-for-like (LFL) sales in the Conviviality Retail division were up 2.3% year-on-year in the reporting period, excluding tobacco sales, and up 0.4% including tobacco.
Long-term contracts
"We have made deliberate choices to successfully grow market share and enhance the quality of future earnings by agreeing long term contracts with our larger customers and securing new national account customers. These gains in market share coupled with our continued strong sales demonstrates our competitive advantage, the broad customer base we have developed and the robust nature of Conviviality as the UK's leading drinks wholesaler, distributor and solution provider to our customers,” said Diana Hunter, the chief executive officer of Conviviality.
"As previously highlighted, cost initiatives for the second half of the current financial year provide confidence for both achieving current year board expectations, as well as the group's longer-term performance," she added.
Prestwich Bargain Booze. pic.twitter.com/nb6fU2wZQP
— ChorltonWheelie (@ChorltonWheelie) January 27, 2018
A fan of the band The Fall has left a tribute to the late band's leader outside Bargain Booze in Prestwich