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Majestic pre-tax profits rise

Published:  23 July, 2008

By Ron Emler
Majestic Wine continued its pattern of unbroken growth in the six months to the end of September. Compared with the same period last year, profits before tax increased by 17% to 6.5 million

Total sales rose by just more than 9% to 88.3 million, while like-for-like sales were 6.2%, reflecting a faster growth rate than in 2005 driven by higher margins. The company has increased its interim dividend by 21% and plans to begin a 20 million share buy-back programme to enhance shareholder value in the next few months.

The average customer spend per transaction has risen by 5.2% to 121, while the average price per bottle bought has gone up to 5.66 compared with 5.54 last year.

These figures partly reflect the increasing proportion of fine wines in Majestic's sales. Bottles priced at 20 and above increased by 33% as the group expanded its floor space devoted to them in 20 stores. Meanwhile, 6.4% of all sales are via the internet, which enjoyed a 43% increase in the number of orders placed during the six months.

Chief executive Tim How said he was very pleased with progress and the contribution made by new store openings. He also revealed that like-for-like sales during October were 4.3% ahead of last year's total. In the first half of 2007 Majestic isplanning to open new stores in Dulwich, Sonning, Aberdeen, Colchester and toresite in St Albans.

One negative aspect of the results was the 7% decline in sales at Wine and Beer World, the Calais operation. This downtrend is being slowed and could be reversed if the European Court rules in favour of low tax personal imports from Europe later this month.