Majestic Wine, the UK wine retailer, has warned of a "challenging" Christmas period ahead, following a drop in first half net profit.

Earnings for the 26 weeks ended 29 September were GBP3.9m (US$6.2m), down from GBP5.1m during the equivalent period last year, Majestic said today (10 November).

Like-for-like sales fell 2% during the period, hit by a 6.4% slump in demand for Champagne, although total revenue increased 3.4% to GBP94m, the retailer said.

Majestic used its results statement to add its own voice to growing concerns in the industry about this year's Christmas trading period in the UK. Like-for-like sales have fallen 4.7% in the five weeks to 3 November, it said.

Many in the drinks industry are bracing themselves for a Christmas of ferocious discounting, in light of the current economic downturn.

Majestic said that it was well prepared for the challenge, however, It will focus on wines from Chile, New Zealand and Bordeaux, and plans to increase its presence in a fine wine category that remains relatively buoyant.

Sales of fine wine priced at more than GBP20 per bottle rose 10.7% during the first half, Majestic said, adding that it would have fine wine display cabinets in 53 stores this Christmas.

Steve Lewis, chief executive, said: "I am pleased that we have maintained our UK wine market share in such challenging conditions." The firm said it would maintain an interim divident of GBP0.28 per share.