Majestic reveals plans to accelerate Naked Wines growth

By Lisa Riley

Published: 17 April, 2018

Majestic has announced it intends to accelerate growth by increasing investment in acquisitions for its Naked Wines arm.

The wine retailer said it would invest up to an additional £12 million in a statement released today ahead of a capital markets day this afternoon.

The accelerated investment, which will reduce Majestic’s 2019’s earnings by up to £3 million before “annual generation of future value from £48 million to £80 million plus a year”, followed the board recognising the opportunity to invest in new customers was “materially bigger than previously thought”.

In the last three years, the group said it had doubled sales at Naked Wines and delivered profitability in all three markets as a result of investment in new customer acquisition.

“We believe we can double the level of investment again while maintaining the returns, driving sustained growth in shareholder value. On a risk / return basis, the case for accelerating investment is clear. We can measure success in months while delivering returns over years. This is the right thing to do to maximise shareholder value,” said CEO Rowan Gormley.

The company was “starting from a good place”, with the core business on track to meet its 2019 sales target of £500 million and the market’s expectation for profits and dividend in FY18, he added.

Following the announcement, the group’s shares initially fell by 5% at the open before trimming losses to 2.3%.

The board said it expected to see “significant benefits” from 2021 and beyond.

Printer friendly version