Conviviality chief executive Diana Hunter said the group’s half-year results represent a “great result” for franchisees.
The Bargain Booze, Wine Rack and Select Convenience franchisees increased their margins by 0.8% on average compared to the same period last year, but Hunter pointed out that many are now shareholders and they will also benefit from the soaring share price.
Conviviality shares have grown 37% in the past year and are up again today after the group’s H1 FY2018 results showed revenue increase 9.2% to £836.3 million.
Analysts at Investec called it a “strong trading performance” and branded Conviviality a “multi-year-growth story that can deliver market share gains through its nationwide scale and one-stop shop model”.
Robert Stephens at Investomania added that it is performing “relatively well in tough trading conditions for the retail sector” and could outstrip retail rivals going forwards.
We caught up with Hunter this morning and she said she was delighted by the positive H1 results.
She told DRN: “It’s a great result for franchisees, because not only do they get margin on their sales, but many are shareholders so they are benefiting from an increased share price. They are becoming more differentiated rather than less. You look at the market, with Booker joining up with Tesco, and Nisa with Co-op, and Bargain Booze, Wine Rack and Select Convenience stand out as a very differentiated proposition.
“We support our franchisees incredibly well and we value them as partners in the group. The care and the level of communication we offer are second to none, and we are the only business that rewards franchisees with shares and treats them as stakeholders in the company.”
She added: “We have put together three great businesses to create Conviviality and worked hard to explain the benefits of working with a new proposition and a new business. To see the revenue growth, you really see that the strategy is right and the proposition is meaningful for our customers. They have recognised the benefits of the proposition and working with us, of using our wonderful buying team’s expertise in complicated categories like wines and spirits. We couldn’t be happier.
“At the end of the day, it’s only half-year results, it’s a moment in time. The share price is up a little bit today and that’s a moment in time too. But the share price has been phenomenal. We have had significant support from our investors, many of whom have been with us since the day we floated Bargain Booze and became Conviviality. So many employees are now shareholders, and the franchisees are too, and they can share in the success.
“There is no reason not to be positive. We are growing in a relatively flat market, because more and more customers see the benefits of working with us. They can create efficiencies in their businesses by using us as a one-stop shop. We are there to help and support them and give them the data and insight on the market that would otherwise be difficult for them to access. We can help them differentiate themselves. We have 14,000 SKUs, more than 6,000 wines, and we can create a wine list that is genuinely unique for our customers.
“When you look at the numbers, you can see that we are growing organically and we still have a relatively small share of the alcohol market, so we can continue to grow in the UK.”