Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1102733

Conviviality crisis deepens fears for retail stocks

Worries over UK high street escalate after boss of Bargain Booze owner resigns with shares suspended after shock profit warning.

 
Conviviality crisis deepens fears for retail stocks
 

Embattled UK retail stocks have endured a fresh sell-off as the crisis at Bargain Booze owner Conviviality (CVRC) provided the latest shock to the sector.

Conviviality boss Diana Hunter resigned this afternoon after the company was last week forced to suspend its shares, having admitted to failing to account for a £30 million tax bill and 'an arithmetic error' that led it to overstate profit forecasts by £5.2 million. An interim dividend of 4.5p, which was due to be paid on Friday, was cancelled, and the company said it was examining the possibility of a cash call.

The news has further clouded the gloomy picture for the UK high street, which has already seen the collapse of Toys R Us, Maplin and Warren Evans in recent weeks.

Retail stocks slumped in response. On the FTSE Small Cap index, Carpetright (CPRC) fell 14.3% to 47.8p, Mothercare (MTC) dropped 11.8% to 15.1p, convenience store chain McColl's Retail Group (MCLSM) was down 9.1% at 230p and Debenhams (DEB) traded 7.7% lower at 25.1p.

Shares in Conviviality had already lost two-thirds of their value on news of the earnings overstatement before the shares were suspended on Wednesday, before investors learned of the tax bill, cancelled dividend, possible fund raise and resignation of its boss.

The shares have endured a precipitous fall after hitting a peak of 424p as recently as November last year, and at their suspended level of 101.2p are just a penny higher than their 100p price when the company floated in the summer of 2013.

The business had built up a strong following of small cap fund manager backers who were being handsomely rewarded before sentiment quickly turned on the company.

Stock market filings show fund group Old Mutual was quick out of the blocks in reacting to the news, halving its stake on the day Conviviality admitted to the earnings overstatement.

Some of those shares were held by Nick Williamson in his £383.2 million Old Mutual UK Smaller Companies Focus fund, with Conviviality a top 10 holding as recently as January. 

Other investors include James Lynch, who holds 3.3% of his £49.3 million Downing Monthly Income fund in the stock, according to the most recent factsheet.

Citywire A-rated Fraser Mackersie and Simon Moon hold 3.1% of their £688 million Unicorn UK Income fund and 2.5% of their Acorn Income (AIF ) investment trust in Conviviality.

Daniel Hanbury is also a backer, with 2% of his £897.4 million River and Mercantile UK Equity Smaller Companies fund held in the company. 

While Conviviality has drifted out of Angela Lascelles' top 10 holdings in her £15.8 million SVS Albion Olim UK Equity Income fund, the stock's drag on performance was noted in the fund's February factsheet.

George Luckraft also flagged the drop in Conviviality shares in his most recent update for investors in his £295.9 million AXA Framlington Monthly Income fund.

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the funds

  • Old Mutual UK Smaller Companies Focus GBP R Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • MI Downing Monthly Income Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Unicorn UK Income
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • River and Mercantile UK Equity Smaller Cos A Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • SVS Albion OLIM UK Equity Income Acc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • AXA Framlington Monthly Income R Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Conviviality PLC (CVRC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Carpetright PLC (CPRC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Mothercare PLC (MTC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • McColl's Retail Group PLC (MCLSM.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Debenhams PLC (DEB.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the investment trusts

  • Acorn Income Fund (Ordinary Share)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • George Luckraft
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Angela Lascelles
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Daniel Hanbury
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Simon Moon
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Fraser Mackersie
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • James Lynch
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Nick Williamson
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Pound slumps as Carney casts doubt on May hike

by Daniel Grote on Apr 20, 2018 at 10:35

Sorry, this link is not
quite ready yet