Conviviality shares hit as it issues update on profit warning
Conviviality’s share price took a further hit today as it confirmed the detailed effect of a profit warning issued last week.
In an update on last week’s trading statement, the company said it expected pre-tax earnings to fall 20% short of market expectations for its current financial year, which ends on April 29.
It said EBITDA was now expected to be in the range of £55.3 million to £56.4 million, below previously prevailing market expectations of between £69.1 million and £70.5 million.
When the company – which owns Bargain Booze, Matthew Clark, Bibendum and various related subsidiaries – issued its initial profit warning on Thursday of last week, the news wiped £300 million off the market value of the company at one point, with the share price plunging 60% within just over an hour of trading to 123p.
Today, the shares hit a low of 98.8p each but rallied in early afternoon trading to stand at around 105p at time of writing.
Conviviality blamed the warning on an accounting error and margin pressure in its Conviviality Direct division in January and February.
In its statement issued today Conviviality expanded on the reasons, saying its revised forecasts reflected “the trading of the company for the current financial year to the date of the [previous] announcement combined with the current expectation for the likely trading performance of the business for the remainder of the current financial year”.
It added: “This includes, as set out in the announcement, the impact of the error in the financial forecasts of the Conviviality Direct business and the assumption that the margin weakness seen in January and February continues for the remainder of the current financial year.
“The company can confirm that the reference to the material error in the financial forecasts of the Conviviality Direct business in the announcement related to an arithmetic error in the compilation of the forecast.”