Lewis: tough year ahead

Majestic chief executive Steve Lewis has warned that “next year will be as tough as the one that’s just finished”, despite turning in increased sales, profits and prices. The wine warehouse chain’s pre-tax profit for the 53 weeks to April 2 was up 14.5% to £23.2 million on a sales increase of 8.9% at £280.3 million.

But growth is being driven by online sales, which were up 7.8%, sales to business customers, which grew 6.9%, and an increase in contribution from its French stores of £1.4 million, up £400,000 on the previous year.

Like-for-like sales in UK stores were up just 2.6%. In the 10 weeks from the year-end until June 11, like-for-likes rose 0.6%.

The move down from 12 to six-bottle minimum purchases in 2009 continues to bring in new customers – the number of people making purchases in the 12 months was up 11% on the previous year at 568,000.

Lewis said internet sales had been boosted by its successful introduction of a mobile phone platform, but he added that new stores would be a key part of future growth plans.

“We want to get to 330 stores within 10 years,” said Lewis. “We know exactly where we want those stores to be, right down to the town – and in most cases to the road – we want to be in.

“The plan is still the same as it’s always been: 3,500sq ft of retail space and eight parking spaces. We have had less – Esher [in Surrey] is 2,500 sq ft but we got round that by building a mezzanine.”

The chain currently has 181 shops, with Esher one of three to open since the year-end. The others are in Northallerton in North Yorkshire and Edinburgh, its fourth in the city.

Sales of fine wine – defined as £20 or more – rose 18.5% to account for 6.2% of in-store sales.

Lewis said: “People are realising that a bottle of Pinot Grigio they might pay £20 for in a restaurant, only costs £5 from us.

“More of them are thinking ‘why not just eat at home and spend that £20 on a bottle of wine that’s actually worth £20’.”