Majestic warns on profits as Naked Wines US campaign falters

In an unscheduled update today, the retailer said its commercial business – which supplies wine to businesses – has been “more challenging” than expected in its first half.

Earnings from this division are likely to come in £2m lower than forecast, it said.

As a result of the slowdown, Majestic said it has launched a review of its commercial operations to “find a better, more profitable approach”.

A further factor has been the failure of a direct mail marketing campaign for Naked Wines in the US, the retailer said. The company said fewer new customers – what it calls ‘Angels’ – had been recruited than expected.

Naked Wines will make a small loss this financial year, it warned, with earnings £2m lower than forecast. 

Chief executive Rowan Gormley, who became boss of Majestic last year after it acquired his Naked Wines group, said: “It is very disappointing that two isolated factors are distracting from the great progress across the rest of the group.

“We have always said we would adopt a test and learn approach, and be quick to redeploy capital from underperforming areas, which is exactly what we are doing. While this approach is delivering good results in the other business units, the scale of the US market means that even a test can have a material effect on profits.”

But he added that Majestic’s turnaround plan for retail is “progressing well”.

He added: “The key initiatives are on track to be delivered on time and on budget, and preparations for peak Christmas trading are well in hand. Naked Wines UK, Australia and the underlying US business continue to trade well, and we have managed to restore Lay and Wheeler to growth.”

Gormley, who is giving his share bonus this year to employees, said it is still on track to resume paying a dividend to shareholders and to hit its goal of £500m sales by 2019.”