Majestic Wine profits grow as customer numbers jump

Published: 19 November, 2012

Majestic Wine's profits are up by 3.9%, driven by an 11.2% jump in customer numbers, according the the group's half year results to October 1, 2012.

Chief executive Steve Lewis said the results showed Majestic's "resilience" against a "challenging economic environment and the wettest summer on record".

The average spend per transaction at Majestic's stores has risen to £126 from
£125 and the average bottle price of still wine is now £7.46 up from £7.13 last year.

The group reduced its involvement in the wholesale drinks market and on-trade meaning sales through this channel declined by £7.2 million to £3.2 million. As a consequence group revenues were £1.8 million lower than last year, at £126 million. Group revenues, excluding wholesale activities, increased by 4.6% to £122.7 million.
Total sales to business customers declined by £5.4 million to £23.6 million after the wholesale scaleback.

Sales to businesses now represent 20.5% of total UK sales, handled by a regional sales team of 25 people selling to restaurants, gastropubs and hotel businesses, who put transactions through their nearest Majestic store. It has 12 extra sales people in London that sell to larger businesses in the City and West End.

"We have seen sales growth of 17% from these managed accounts. We see considerable potential for further growth from this channel," said chairman Phil Wrigley.

Its online sales are up 14% on the same period last year now represent 9.8% of
total UK retail sales. It attributed the growing numbers to the recent changes it has made to its mobile site and the fact it has reduced online minimum orders to six bottles.
It has opened nine new stores in the six-month period, including its first in Cornwall in Falmouth. Since October it has opened two further stores, bringing its estate to 189. It target remains to expand to 330 stores.

Its fine wine specialist arm Lay & Wheeler showed an impressive profit hike from £506,000 up from £292,000 before interest and tax thanks to sales of the Bordeaux 2009 vintage which were sold in the summer of 2010 and delivered in this half year. The principal activity during the half has been the selling of en primeur wines from the Bordeaux 2011 vintage. The quality of the vintage was reasonable, however demand from consumers was low following two exceptional vintages. Sales from the 2011 vintage will not be reported until the 2015 financial year.

Majestic Wine's French arm saw profits grow to £817,000 from £658,000 compared to the first half of last year. It closed its Cherbourg store and now operates just two stores in Calais and Coquelles.

Wrigley added: "We recognise that the environment in which we operate is likely to remain challenging. 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."

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