Majestic Wine finds reason to celebrate with record profits

 
Kasmira Jefford
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THE BOSS of Majestic Wine said the UK public was as much in love with food and wine as ever, after consumers spending on special occasions helped to drive record full-year profits.

The wine retailer posted pre-tax profits of £23.2m, up 14.5 per cent in the year to 2 April, helped in part by growing demand for fine wines priced at £20 per bottle or more.

“That’s counterintuitive,” chief executive Steve Lewis told City A.M. “But if you think about it, a Pinot Grigio in a good pizza restaurant will cost you £15 a bottle – for a few pounds more at home you can have a wine you can really talk about.”

The group, which owns 181 wine warehouse stores in the UK, said total revenues increased by 8.9 per cent to £280.3m, driven by a like-for-like sales increase of 2.6 per cent.

The sale of fine wines increased by 18.5 per cent and now represents 6.2 per cent of total sales.

New World wines proved especially popular, in particular New Zealand wines, which account for 19 per cent of still wine sales.

The number of customers who made purchases increased by 11 per cent to 568,000, while the average bottle price of still wine was up to £7.34 from £6.94 the previous year.

Lewis said that while the past 12 months had been challenging for the company and other retailers, consumers were “behaving in a rational way”, choosing to buy better wine but less of it.

“When there is a real reason for them to come out and spend, like Christmas and the Jubilee, they come out in droves. In the other months they are being more cautious and that is entirely natural, reasonable behaviour.”

Sales to restaurants, bars and pubs grew 6.9 per cent, representing 24 per cent of total revenue while Majestic’s online sales rose by 7.8 per cent to 10 per cent of total sales.

Majestic opened a record 16 new stores in the year in places like Surrey and Edinburgh. It plans to open another 16 stores over the next year, eventually expanding to 330 stores.

The group upped its total dividend by 20 per cent to 15.6p.

Lewis said while he was “a natural optimist” he saw no signs of the retail environment improving in the next twelve months.