Conviviality has issued a profit warning after uncovering “a material error” in its financial forecasts.

The Bargain Booze and Wine Rack owner said it now expects adjusted EBITDA for its current financial year to come in 20% below current market expectations.

Its share price tanked almost 60% after informing the City this afternoon.

Conviviality said the inaccuracies were related to its Conviviality Direct business, which supplies alcohol to restaurants and pubs across the UK.

It said the forecasting error within that division, which includes Matthew Clark and Bibendum, meant EBITDA in the year ending April 29 would come in £5.2m below expectations.

The business added that margins from Conviviality Direct had “softened” during January and February.

Conviviality insisted “a number” of measures had been introduced to address the margin weakness and said “appropriate corrective actions” were now in place.

The business will file a pre-close update on March 27.