Majestic Wine reports profits down but sales up
Majestic Wine’s boss Rowan Gormley is confident his turnaround plan is working, even though the company has posted a £4.4m drop in profits for its first half.
Majestic posted a pre-tax loss of £4.4m (for the six months to 26 September), compared with a profit of £4.5m for the same period last year, but sales rose by 10.6%. The loss came about as a result of increased investments aimed at driving growth in the business.
Meanwhile, like-for-like sales rose 5.7% in the 26-week period, despite a “very challenging market” and the company reiterated its pledge to hit annual sales of £500m by 2019. The retailer also noted that customer numbers rose 9.1% to 820,000 active customers and sales at Naked Wines jumped 26.7%; plus it has reinstated its dividend as a sign of confidence in the success of its turnaround plan.
Speaking to OLN, managing director (Retail), John Colley said: “We have been investing in projects designed to drive up growth and the early signs are that they are working. Overall we are pretty confident that the plan looks to be working and this can be seen when we look at our underlying sales growth in the first half.
“From a retail point of view, moving the agenda from opening stores into increasing customers has been a good strategy. Overall, to get 10.6% growth in any business is a challenge. People are also buoyed by the face we have reinstated our dividend.
“The key focus for us over the next couple of months is around the peak trading period.”
Rowan Gormley, group chief executive, said: “Our plan is working. We said that we would deliver sustainable growth, not by opening more stores, but by investing in better customer service and better customer retention. Both of these are working – sales are up over 10% and the projects driving that sales growth, like nationwide next day delivery, are on time and on budget.
“Now that we have built a solid platform for future growth, future cost growth will be much lower.
“We are reiterating our commitment to hitting our goal of delivering £500m sales by 2019, and we believe that will translate into healthy profit growth now that the step change in investment is complete.
“We are reinstating the dividend as a signal of our continued confidence in the plan.”
Meanwhile, the company’s fine wine arm, Lay & Wheeler, returned to profit, up 27.8% to £7m. The division has had a shake-up in its management team over the period of the first half.