Majestic Wine swung to loss in the year to the beginning of April, but it has reached the half-way point of a difficult transformation process, and chief executive Rowan Gormley told City AM the "heavy lifting" is finished.
On an underlying basis, sales were up 11.4 per cent to £461.1m in the year.
However, because of weak sterling and one-off costs like the acquisition of Naked Wines, the wine retailer posted a full-year loss before tax of £1.5m.
Naked Wines showed strong growth though, with sales up 26.3 per cent overall. Revenue growth was especially strong in the US.
Shares in Majestic, which is listed on London's Alternative Investment Market (Aim), were down 7.99 per cent at 354p in afternoon trading.
Why it's interesting
Majestic's turnaround plan still has a way to go, but a big chunk of the heavy lifting is finished. The firm, which had a tough year following the EU referendum and a profit warning in September, said it is working to better understand its customers.
Growing its customer base through investments in the business rather than new store openings is a process Gormley called "patronisingly simple, but incredibly powerful". The firm now collects data to identify who its high-value customers are and works to communicate with them in an "interesting, targeted way". But Gormley said it's just scratching the surface of personalisation.
The former bricks and mortar retailer is now pushing online growth, and Gormley said its next focus is customer-facing projects like a new website and app.
Gormley also believes sales growth comes by retaining good employees. "The key thing is more of a focus on making Majestic a company where dynamic and entrepreneurial people can make a real career in retail," he said.
What Majestic said
We are past the tipping point, both financially and operationally.
Together these mean we have a business that is better able to weather the uncertain trading environment, with a sustainable growth model, the big strategic questions answered, a better paid and rewarded workforce and more effective systems and processes.
What analysts said
Phil Carroll, analyst at Shore Capital Markets said:
The group is now past the half way stage of its transformation process having invested over £8m through the income statement to strengthen the business rather than in capital spend on a store rollout programme. Majestic is now in a more robust position with a consistent record of positive like-for-like sales growth in the retail division and strong growth in revenue in Naked Wines.