Majestic Wine profits flat during 'difficult' year as it vows to invest

Like-for-likes dipped 0.1% although total sales edged up 1.4% to £278.2m in its year to March 31.

Majestic Wine chief executive Steve Lewis told Retail Week that the past year had proved challenging “primarily because of price inflation over the past couple of years, although it has levelled out now”.

He added that the sector remained highly competitive with pressure from the supermarkets, but said the company continued to differentiate itself.

“Very clearly we’re very different from the supermarkets,” said Lewis. “If you look at our model we offer a high level of customer service and provide activity like wine tasting.”

He said profits were flat because the company invested in a new website that went live last July, the relocation of its head office and a new distribution centre, which will move to a modern and larger facility at the end of June.

Lewis said: “Majestic made good operational progress in the last year and despite the difficult trading environment delivered a solid performance. 2015 will be a year of increased investment for Majestic to ensure that we have the right infrastructure to maximise on our long term opportunities for future growth.”

Market share increased 0.1% to 4.2% over the year as active customer numbers rose 2.9% to 643,000. Majestic Wine chairman Phil Wrigley said that this not only demonstrated its ability to hold share in a challenging market but highlighted its potential to grow.

He said: “We are confident that we can take advantage of this market opportunity by our ongoing investment in new stores, developing our staff, technology and central facilities.”

The retailer plans to grow its store portfolio from 206 shops to 330 over the next eight years, with plans to open between 12 and 16 stores this year. It also plans to grow its ecommerce, business customer and fine wine sales.

Majestic Wine warned that profits would be flatter in the current year because of its investment but it would return to growth in 2016.

Over its last financial year, online sales at Majestic Wine increased 5.8% to £27.7m and now represents 11.4% of UK retail sales.

Commercial sales jumped 20.6% to £37.3m.

Fine wine surged 19.7% to £18.7m over the year and it also witnessed a surge in rose from Provence, up 84%, while Malbec from Argentina, Chile and France was up 50%.

In March, Majestic Wine hired former Evans Cycles people and stores director Mike Hedgecocks as retail director.