7 Nov 2017 07:00
7 November 2017
Conviviality Plc
("Conviviality", the "Company" or the "Group")
Trading Update
Conviviality Plc (AIM: CVR), the UK's leading independent wholesaler and distributor of alcohol and impulse, serving customers through its franchised retail outlets and through hospitality and food service, is pleased to provide an update on trading for the 26 weeks to 29 October 2017.
Group unaudited revenue for the period was 9.2% ahead of last year at £836m (H1 FY2017: £766m*) and 7.9% above the corresponding prior period.
Conviviality is pleased to report that sales in each business unit for the 26 weeks ended 29 October 2017 were notably above the corresponding prior period:
· Conviviality Direct sales up 6.9% over the corresponding prior period to £540m (H1 FY2017 £500m*)
· Conviviality Retail sales up 10.0% over the corresponding prior period to £203m (H1 FY2017 £185m*)
· Conviviality Trading sales up 9.6% over the corresponding prior period to £93m (H1 FY2017 £82m*)
The Group continues to perform in line with the Board's expectations for the 52 week period ending 29 April 2018.
Conviviality Direct:
Trading has strengthened as existing customers have recognised the benefit of being able to fulfil all of their drinks purchases through Conviviality Direct. This is evidenced by: -
· 5.7% increase in revenue per outlet and 1.2% increase in the number of outlets served;
· 425 new customers joining the Company as the advantages of our extended choice, service and product availability become increasingly recognised and
· 5,100 customers have engaged with the newly upgraded digital platform, enabling them to access the full product range in a way that is easy to interact with and time saving.
We are pleased to report that, during the period, we experienced an increase in sales to large national account customers with a resultant shift in the Group's gross margin mix.
Conviviality Retail:
We are pleased to have achieved strong sales growth in Conviviality Retail during the period, driven by our strategy to focus on improving the quality of the store estate, as well as increasing the number of multi-site franchisees. This is reflected by:
· a 53% increase in average sales per store opened in the six month period, as the quality of new stores opened improved, both in terms of location and proposition;
· LFL sales continuing to improve in line with the Board's expectations with LFL sales of +2.3% excluding tobacco and +0.4% including tobacco. The decline in the tobacco market is being partially mitigated by the increase in the vaping assortment, with 403 Franchise stores now retailing vape products; and
· Multi-site franchisees continuing to maintain higher LFL sales - on average 2.8% points higher than the rest of the estate.
At the half year, the number of stores was 708 (FY2017: 713) with store openings for the full year remaining in line with the Board's expectations.
Conviviality Trading:
Revenues have strengthened as its customers increasingly recognise the skill and talent of the team at managing the complex premium wine category and utilising the exclusive supplier agreements that Conviviality has to support their ranging plans. Furthermore, the agency business in both spirits, soft drinks and beers continues to grow as the natural scale and reach of the Conviviality Group supports agency growth. In the first half of the year, the business has supported 250 festivals and events, up from 181 in H1 FY2017.
IT & Systems
The Company continues to deliver the integration of Matthew Clark and Bibendum PLB Group with the implementation of its ERP system into Bibendum during the period. All business units will be operating on the same ERP platform by the current financial year end, however, in order to ensure the successful implementation of the ERP system across the remainder of the Group, whilst ensuring excellent service delivery, the system is being rolled out on a more sequential basis during the year. The phasing of this will result in the associated cost savings being more H2 FY2018 weighted than previously anticipated.
Net Debt
Net Debt at the half year was £134m compared to £139m last year.
Outlook
Conviviality continues to perform in line with the Board's expectations for the 52 week period ending 29 April 2018. However, reflecting the phasing of cost savings, profits for the full year will be more H2 FY2018 weighted.
Conviviality will announce its Half Year Results for the 26 weeks to 29 October 2017 on 29 January 2018.
Diana Hunter, Chief Executive Officer of Conviviality, said:
"We are pleased to have delivered strong revenue growth during the period. This performance is a direct result of the support and engagement of our valued customers and Franchisees across our entire business, our suppliers and global producers and the talented teams who work closely with them.
"During this period the Company has undergone significant change as we continue to implement systems that will ultimately serve to future proof our business and enable us to continue to deliver the outstanding service that our customers and Franchisees expect from us."
*Prior year sales have been restated to reflect the adjustments made in the financial year ended April 2017 relating to the classification of retrospective sales rebates, listing fees and franchise fees and the removal of inter segment revenues. In addition, Conviviality Direct's festival business has been consolidated with Conviviality Trading's festivals business and is reported with Conviviality Trading and the prior year has been restated accordingly. Bibendum PLB Group sales for the period 1 May 2016 to 19 May 2016 were incorrectly included in sales for the 26 weeks ended 30 October 2016 and have been removed. This correction has no material impact on previously reporting profit.
Enquiries:
Conviviality Plc Tel: 01270 614 700Diana Hunter, Chief Executive OfficerInvestec (Nominated Adviser and Broker) Tel: 020 7597 5970Garry Levin / David Flin / Daniel Adams
FTI Consulting Tel: 020 3727 1000Jonathon Brill / Georgina Goodhew / Fiona Walker