Shares of Crewe-based alcohol wholesaler and distributor Conviviality Plc — which owns Bargain Booze and Wine Rack — plummeted 60% on Thursday after it warned in a trading update its earnings will be 20% below market expectations.

Conviviality blamed the warning on a “material error in the financial forecasts” of its Conviviality Direct business.

“Following a review of current year projections, the company now expects that adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) for the current year will be approximately 20% below current market expectations,” said Conviviality.

“The previous guidance for net debt of approximately £150 million for the period ending 29 April 2018 remains unchanged.

Conviviality said the change in expectations reflected a material error in the financial forecasts of Conviviality Direct, which means the EBITDA for the current period will be affected by £5.2 million.

It added that margins in Conviviality Direct softened in January and February.

“In the revised guidance the company has assumed a continuation of the margin weakness for the remainder of the current financial year,” added the firm.

“A number of enhanced controls and disciplines have been introduced to address this and management believes that appropriate corrective actions are in place.

“The company has not seen any material weakness in overall demand and the previously announced cost saving actions remain fully on track.

“The company will provide a pre-close update on 27 March 2018.”