UK: Majestic boosted by sales of fine wines

By | 18 June 2012

  • Full-year net profits up 17% to GBP16.7m (US$26.1m) 
  • Net sales in year to 2 April rise 9% to GBP280.3m
  • Operating profits up 13% to GBP23.4m
  • Future trading environment will "continue to be difficult" 
Majestic saw profits rise, but has warned of tough times ahead

Majestic saw profits rise, but has warned of tough times ahead

Specialist wine retailer Majestic Wines has reported a healthy rise in full-year profits thanks to an increase in sales of bottles priced at GBP20 and above. 

Net profits were up 17% to GBP16.7m (US$26.1m) in the year to 2 April, the company said today (18 June). Net sales rose 9% to GBP280.3m.

Operating profits, meanwhile, increased 13% to GBP23.4m. 

Customer numbers in the last year rose 11.1% to 568,000, with the average spend per customer up GBP2 to GBP128, the company said. The average price of a bottle of wine purchased was GBP7.34.  

Sales of fine wine - priced at GBP20 per bottle and above - rose by 18.5% year-on-year, representing 6.2% of UK store sales.

Meanwhile, online sales rose 7.8% year-on-year and now represent 10% of UK sales, the company said. 

“Majestic has a clearly differentiated operating model, with a focus on delivering exceptional customer service that has proved resilient in a challenging economic environment,” said Steve Lewis, Majestic's chief executive.

Current trading figures show that, in the ten weeks from 3 April to 11 June, UK like-for-like sales were up 0.6%. 

Looking ahead, chairman Phil Wrigley said that, while the trading environment would remain "difficult", the company was "well placed to deal with the challenges and opportunities ahead."

Shares in Majestic this afternoon were down 4p at 407.75.

Show the press release

PRELIMINARY RESULTS 

“Good progress towards strategic objectives” 

Majestic Wine PLC (“Majestic”), the UK’s largest wine specialist with 181 stores, today announces its preliminary results for the 53 weeks ended 2 April 2012.  

HIGHLIGHTS

  • Group profit before tax increased by 14.5% to £23.2m (2011: £20.3m).
  • Total sales up 8.9% to £280.3m (2011: £257.3m).
  • Like for like sales in UK retail stores up 2.6%.
  • Final dividend of 11.8p net per share, bringing the total dividend for the year to 15.6p, an increase of 20.0% on last year (2011: 13.0p).
  • Lay & Wheeler: Profit before interest and tax at £1.9m (2011: £0.7m).
  • Majestic in France: Profit before interest and tax at £1.4m (2011: £1.0m). 

Key Metrics 

  • A further significant increase in the number of customers who have made purchases in the last twelve months, up 11.1% to 568,000.
  • Average spend per transaction up £2 to £128.
  • Strong growth in transaction numbers, up 8.3% to 2.2m.
  • Average bottle of still wine purchased at Majestic is now £7.34 (2011: £6.94).
  • Online sales increased 7.8% on last year and now represent 10.0% of UK retail sales.
  • Majestic Commercial: Sales to business customers grew 6.9% on last year and now represent 24.0% of total UK sales.
  • Sales of fine wine (priced at £20 per bottle and above) increased by 18.5% on last year, representing 6.2% of UK store sales.

Stores 

  • Record sixteen openings in the financial year. Evesham, Weston-Super-Mare, Fleet, Livingston, Hale, Dundee, Worthing, Bury St Edmunds, Clitheroe, Ripon, Braintree, Chesterfield, Wirral, Broadstairs, Wakefield and in Berwick upon Tweed.
  • Since the year end, we have opened in Northallerton, Esher and Queensferry Road in Edinburgh, giving us 181 stores in the UK.
  • We are confident of being able to expand Majestic to 330 locations. 

Current Trading 

  • In the ten weeks from 3 April to 11 June 2012, UK like for like sales up 0.6%.

Commenting on the results Steve Lewis, Chief Executive, said: “Majestic has a clearly differentiated operating model, with a focus on delivering exceptional customer service that has proved resilient in a challenging economic environment.”

Original source: http://maj-cms.snowvalley.com/upload/PDFs/Investors/prelims2012.pdf

Expert analysis

Take-Home Trade Market Report

Key Note estimates that the UK take-home trade was worth £15.48bn in 2010, after rising by 4% on 2009. Since 2006, market value has increased by 13.5%, indicating that the industry has enjoyed relatively steady growth during the 5-year review period despite the economic downturn.

Sectors: Company results, Wine

Companies: Majestic

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