Majestic Wine swings to profit but warns market to remain tough

Majestic Wine said on Thursday that it swung to a profit in the year to 2 April 2018 but warned that it expects the market to remain tough.

The company made a profit of £8.3m versus a loss of £1.5m the year before, as revenue rose 2.3% to £476.1m. Meanwhile, the final dividend per share was lifted to 5.2p from 3.6p in 2017.

Naked Wines saw underlying sales growth of 11.3% in the year to £156.1m, with the business growing "considerably" in the US and Australian markets. Adjusted earnings before interest and taxes were up a whopping 571.2% to £8.7m.

Majestic Commercial saw underlying revenues fall 5.6% to £43.5m and EBIT rise 1.7% to £2.4m in the period as the division has been in a holding pattern up until the appointment of a new managing director, Olivia Fitzgerald, in April 2018. Majestic said it was hopeful that this business is now in a position to start to grow again following the investment in the Majestic Retail IT systems and processes.

In Majestic Retail, underlying revenue was 1.9% higher at £263.8m and adjusted EBIT was 0.4% firmer at £13.3m. Lay & Wheeler, meanwhile, saw its revenues edge up 0.2% to £14.5m and EBIT drop 1% to £0.9m.

Majestic Commercial saw revenues fall 5.4% in the period as the division has been in a holding pattern up until the appointment of a new Managing Director, Olivia Fitzgerald, in April 2018. Olivia has extensive sales and hospitality experience, and has jumped straight in. We are hopeful that this business is now in a position to start to grow again following the investment in the Majestic Retail IT systems and processes.

Chief executive Rowan Gormley said: "Naked Wines continues to storm ahead with underlying sales growth of 11.3% in the year. The business has grown considerably in the exciting US and Australian markets and has proved that the digital customer acquisition channel is delivering high quality new customers in addition to our traditional partner channel.

"If the UK is headed for a retail crisis, as some commentators are suggesting, then we are planning for a great crisis. We founded Naked Wines during the financial crisis of 2008 and proved that investing in acquiring customers and generating loyalty through great products and service, will drive profitable growth even in a tough market."

At 0945 BST, the shares were down 0.1% to 449.50p.