Conviviality, the owner of Bargain Booze and Wine Rack, has filed a notice of intention to appoint administrators
This marks the end of a turbulent week where they tried to raise £125m from investors in the face of falling sales and an unexpected £30m tax bill. The sales of the company fell from £70m per annum to £55m.
The company aimed to sell alcohol at rock bottom prices and went on a massive expansion drive. It even bought up the upmarket wine retailer Bibendum. Only in January the business was confident and said that the company produced profits of £7.5m and growth was "above market" It seems that their financial function was found wanting as only a month later it said that profits would be 20% below market expectations. It blamed an error in its forecasts and weaker profit margins. Now 2,500 jobs are at risk.
In its latest update, the company said: "Unless circumstances change, and in accordance with statutory requirements, the Board intend to appoint administrators within 10 business days. The filing of a notice of appointment of administrators protects the company from any creditor action such as winding up petitions for upto 10 days while a sale or rescue is sought. They do have the option of extending it another 10 days but this is harder to achieve these days as it is seen as just delaying the inevitable.
Conviviality said it would continue to trade and was exploring "a number of inbound enquiries regarding a potential sale of all or parts of the business".
Conviviality is the latest in a long line of retailers that are experiencing troubles with higher costs and changing consumer habits. Although it is also true that a number of them have gone on perhaps overly ambitious growth plans.