UK: Majestic Wine H1 profits boosted by online sales

• First-half net profits up by 7% to GBP6.7m (US$10.7m)
• Net sales in H1 dip by 1.4% to GBP126m
• Operating profits edge up by 3% to GBP9.2m
• Online sales increase by 14%

Specialist wine retailer Majestic Wine has seen profits rise as online sales increased to about one-tenth of UK transactions.

Net profits in the six months to 1 October rose by 7% to GBP6.7m (US$10.7m), the company said yesterday (19 November). Net sales fell by 1.4% to GBP126m in the period, while operating profits edged up by 3% to GBP9.2m.

Majestic said the sales drop was caused by the company's withdrawal from the wholesale drinks market and its new focus on the on-trade.

Online sales, meanwhile, climbed by 14% to grab a 9.8% share of the group's UK transactions. The number of “active customers” also increased, up by 11.2% to 594,000. Active customers are those on the company's database that have purchased products in the past 12 months.

Majestic CEO Steve Lewis said: “These results, achieved in a challenging economic environment and the wettest summer on record, display the resilience of the Majestic business. I am pleased that so many new customers are choosing to shop with Majestic.”

The bad weather meant the results were weaker than Majestic's full-year numbers released in June, when net profits climbed by 17% and sales rose by 9%, the company said.

Majestic's H1 financial report did not include second-quarter figures.

Majestic Wine Calais saw operating profits climb by 24% to GBP817,000 while the company's fine wine unit, Lay & Wheeler, posted an operating profit increase of 73% to GBP506,000.

The company said it is looking to the upcoming festive season to boost sales. “We recognise that the environment in which we operate is likely to remain challenging,” it said.

“We are most encouraged by the number of new customers attracted to Majestic and we are well prepared for the very important Christmas trading period.”

Majestic's shares dipped slightly when trading opened yesterday but had climbed 2.5% by close of play. 

To read the company's official statement, click here.