Majestic defies difficult summer

19th November, 2012 by Gabriel Stone

Majestic Wine has reported a 3.9% increase in pre-tax profits to £9.2 million for the six months to 1 October 2012, driven by online sales growth, a strengthened customer base and shift towards on-trade sales.

Despite seeing its summer trading hit by poor weather, the UK-based wine merchant reported an 11.2% rise in the number of active customers on its database, with the average spend on still wine increasing from £7.46, compared to £7.13 a year ago.

While sales through its expanding number of outlets – the company opened nine new stores during the period – rose by 4.5% to £108.7m, online sales saw even stronger growth of 14%, with a 19.9% uplift in the number of orders placed via the internet.

This increase, which means that 9.8% of the firm’s total UK sales are now generated online, was supported by the launch of a new mobile-optimised website and Majestic’s decision to reduce the minimum purchase to six bottles in line with its in-store policy.

Despite this online growth, Majestic confirmed plans to continue its store expansion plan. With 189 outlets in total to-date, Majestic chairman Phil Wrigley said: “We are pleased by the initial sales recorded in all these stores and continue to see the potential to expand the UK store portfolio to 330 locations.”

Wrigley also outlined the impact of Majestic’s strategic shift away from the wholesale channel as it strengthens its focus on developing on-trade business instead.

As sales to business customers fell by £5.4m to £23.6m, representing 20.5% of total UK sales, Majestic’s 25-strong regional on-trade sales teams helped to drive sales growth of 17% from these accounts.

With logistics for this hotel, pub and restaurant side of the business handled by local Majestic stores, aided by a dedicated office and team in London, Wrigley noted: “We see considerable potential for further growth from this channel, leveraging our nationwide presence, excellent in-store service and flexible delivery arrangements.”

At Majestic’s fine wine subsidiary Lay & Wheeler, pre-tax profits rose to £506,000 from £292,000 in the first half of last year, thanks to income from the buoyant 2009 Bordeaux en primeur campaign.

However, Wrigley suggested that this figure was likely to dip again as a result of the most recent, more challenging 2011 Bordeaux en primeur season, which will not be reported by Majestic until 2015.

“The quality of the vintage was reasonable, however demand from consumers was low following two exceptional vintages,” he observed.

Having reduced its presence in France to two stores in Calais and Coquelles, Majestic saw pre-tax profits rise from £658,000 to £817,000 as UK customers took advantage of lower French alcohol duty.

Reporting like-for-like sales growth of 1.2% in UK stores for the first six weeks of its second half, Wrigley offered a measured but positive short term outlook.

“We recognise that the environment in which we operate is likely to remain challenging”, he said, but added: “We are most encouraged by the number of new customers attracted to Majestic and we are well prepared for the very important Christmas trading period.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our newsletters

Job vacancies

Commercial Director

The Drinks Business Hong Kong
Hong Kong

Key Accounts Manager - Impulse Channel

Australian Vintage Limited
Croydon, Greater London, United Kingdom, GB

Sales Support Assistant

H2Vin Ltd
London, UK

Sales Administrator

Les Caves de Pyrène
Guildford, Surrey

Sales Order Processor

Amathus Drinks
Park Royal, London NW10, UK

Sales Executive (London – Craft Spirits)

Bimber Distillery
London, UK

Events & PR Co-ordinator

Alliance Wine
London, UK

Partner Development Manager - That Boutique-y Gin Company

That Boutique-y Gin Company
Field Based, UK

Head of Merchant Sales

Grapevine the Wineservice Company
Cumbria, UK

Business Development Manager – Central London

Marussia Beverages UK Ltd
Field based – London, UK

Account Manager – Premium Restaurants, London

Kingfisher Beer Europe Ltd
London (Central), UK

Field Sales Representative - Beer Innovation

Elastic
Various locations, UK

Events Executive

The Drinks Business
London, UK

Area Sales Executive

Gordon & Macphail
Southern England (excluding London) and Inner London, UK

Buyer – Wine & Spirits

Sipp
London, UK

The Global Malbec Masters 2017

Deadline : 1st August 2017

The Global Beer Masters 2017

Deadline : 1st August 2017

Global Chardonnay Masters 2017

Deadline : 1st August 2017

The Global Riesling Masters 2017

Deadline : 1st August 2017

Click to view more

The Global Organic Masters 2017

The drinks business is thrilled to announce the launch of The Global Organic Masters

The Drinks Business Awards 2017

Now in its 15th year, the db awards have become the most authoritative, internationally respected badge of achievement in the alcoholic drinks industry.

The Asian Cabernet Sauvignon Masters 2017

the drinks business Hong Kong announces its first year of The Asian Cabernet Sauvignon Masters.

Rioja Masters 2016

Now in its fifth year, the competition will recognise and reward the finest Riojas on the world stage.

Click to view more