Majestic soars ahead

Majestic Wines has blitzed its way through 2010, demonstrating a half-yearly profit growth of 20%, partly generated by the retailer lowering its minimum purchase from twelve to six bottles.

The UK’s largest warehouse chain also confirmed an increase in active customers of 14%, a rise in sales by 10.2% and like-for-like sales growth in UK stores of 7.6%.

According to the results, the retailer’s profit before tax increased by 20% to £7.3 million (2009: £6.1m).

Meanwhile, its total sales amount to £117.6m following the 10.2% increase (2009: £106.7m), its active shopper increase of 14% nearly takes its customer tally to half a million customers, at 496,000, while its online sales increased by 8.3% and now represent 9.1% of Majestic’s UK retail sales.

Chief executive Steve Lewis told the drinks business: “One of the key drivers has been that we’ve brought in new customers since we introduced the six-bottle case in September 2009. This brought in a large increase in transactions but only a small decrease in average sales. It also helped customers, who are now using the tasting counters a lot more, to do what they want to do, which is what we want after all.

"Other things that have helped drive these results," added Lewis, "is that our private customers have come back and Champagne is back in growth again (5%), both of these were issues caused by the recession," he noted.

Aided by the weakening of the property market, Majestic also announced plans to open a record 12 stores before the end of 2011, accelerating its ultimate target of having 250 outlets (it currently has 160).

"We decided to be more assertive and more ambitious with our store openings," commented Lewis.

He added: "What’s encouraging is that if you’re one of our new store managers with a shop full of 850 wines, it’s much easier to sell a case of six than twelve bottles. And actually, the average bottle price per six-bottle case is higher. For six bottle cases, this is £8.59 but the average for a 12-bottle case is £7.55."

Majestic confirmed that its division in northern France, Wine and Beer World, also recorded sales growth of 22.9% on constant currency basis.

The results showed that the interim dividend increased 17.9% to 330 pence. When the retailer reported strong full-year results in June this year, its shares grew by 6.4% to 289p.

The company made an underlying pre-tax profit of £16m for the year to 29 March 2010.

Jane Parkinson, 22.11.2010