If you've never heard of Bargain Booze it's probably because you live in the south of England where the chain of low cost off licences doesn't have much of a presence. But all that is set to change after the parent company, Conviviality Retail, floats on the Alternative Investment Market (Aim) next Wednesday.
The shares will start trading on Aim at the placing price of 100p, giving Conviviality a market capitalisation of £66.7m. The proceeds will be used to pay off debt, buy out existing partners and shareholders and fund expansion into the south of England. Management has also said it wants to focus more on the stores' wine offering.
Conviviality has one of the UK's largest franchised off-licence-led convenience chains, with 611 stores and 461 franchisees, trading mostly under the Bargain Booze and Thouroughgoods brands. Revenue in the year ended 30 April totalled £372m, and cash profit was £12.5m.
To help drive growth, Conviviality is to run an incentive plan with its franchisees, awarding shares in return for hitting certain performance targets, such as store standards and cash profits. This might have something to do with chief executive Diana Hunter, who previously worked for Waitrose and Sainsbury's, which both have well-known employee bonus schemes.
In terms of logistics, the company says it has the infrastructure and capacity to service more stores out of its two central distribution warehouses in the North West of England. It believes rising alcohol sales on the one hand, and bargain-hungry consumers on the other, will help fuel growth. "We plan to take advantage of consumers' focus on value," says Ms Hunter. "We are ideally placed for this with a strong brand, strong underlying growth prospects and a footprint and store format that can be expanded from our heartland in the North-West."
