Majestic Wine back in the black after year of transformation

 
Alys Key
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Majestic is back in the black (Source: Majestic Wine)

Shares in Majestic Wine closed up today even as the retailer's boss warned that the UK market could be even tougher next year.

The group reported a profit after booking a loss this time last year, as well as growth in sales. Shares in the company were up two per cent at the close.

The figures

Group sales were up 2.3 per cent, mostly driven by 11.3 per cent growth in the Naked Wines division. Meanwhile the Majestic Retail stores grew underlying sales by 1.9 per cent.

Profit before tax came in at £8.3m, putting the business back in the black after a £1.5m loss in 2017.

Read more: The grape depression: Wine output has fallen to a 60-year low

Why it's interesting

Investors are likely to be relieved by this morning's results, especially the strong growth in Naked Wines. In April, Majestic topped up its investment in Naked Wines to supercharge growth of the business.

On the retail side, performance has improved despite what chief executive Rowan Gormley described as a "tough" market.

But he told City A.M. that there was still value in bricks-and-mortar.

"What the stores give us is the opportunity to give customers who are bored of supermarkets and want to discover the magic of wine, the opportunity to do that face to face and try the wines," he said.

Analysts at Liberum suggested that current measures to save costs and ramp up the retail business could improve sales by as much as three per cent.

He added that unlike supermarkets, he was not worried about Amazon trying to muscle in on its territory because wine is "much more of a romance purchase if you like, and Amazon doesn't do romance".

Following Tim Martin's decision yesterday to replace French champagne with English wine, Gormley said that it was an "exciting" time for English wine.

"We just need global warming to follow through and then it will be more exciting."

Read more: Break open the bubbly: UK sparkling wine consumption has hit a new high

What Majestic Wine said

Rowan Gormley said: "If the UK is headed for a retail crisis, as some commentators are suggesting, then we are planning for a great crisis. We founded Naked Wines during the financial crisis of 2008 and proved that investing in acquiring customers and generating loyalty through great products and service, will drive profitable growth even in a tough market."

Read more: Majestic tops up investment in Naked Wines, but warns profits will fall

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