Majestic Wine profits fall 22.5%
Majestic Wine has reported a drop in its annual pre-tax profit of 22.5% to £18.4 million in its first annual report since acquiring Naked Wines for £70 million earlier this year.
The company attributed the drop on a number of “exceptional, one-off costs” related to the deal, against a “challenging backdrop of a fiercely competitive environment”.
Despite an overall drop in profits, the company grew its market share by 0.1% to its highest ever level at 4.3%, whilst UK like for like sales grew by 1.9%. Sales rose 2.3% from the year before, to £284.5m.
Rowan Gormley took over as chief executive of the company in April following the departure of Majestic’s previous chief executive, Steve Lewis.
Gormley founded Naked Wines, a crowdfunding wine retailer that connects independent winemakers with “angels” to fund start-up business, in 2008.
Through its acquisition, Majestic gained a further 300,000 customers to its existing 640,000 and Naked Wines’ online and e-commerce skills – a new frontier for Majestic.
Gormley said in a statement: “I have only been Group Chief Executive for ten weeks but it is clear to me that the enlarged Majestic Group has excellent future prospects. Majestic Wine has many unique competitive advantages, especially its incredible staff. When combined with Naked Wine’s digital strengths, and both businesses ability to source exclusive and exciting wines for their customers, we are uniquely placed to build a fast growing international leading wine specialist.”
“Whilst my review of the business is ongoing it is obvious that we need to make investments to reinvigorate Majestic Wine. These investments will initially suppress profit in the short term but I am confident we can rebuild momentum in this excellent business. At the same time we aim to maintain the international growth trajectory of Naked Wine and crystallise the benefits of having the two businesses in the same Group. I am confident that we will create significant value for our shareholders over the medium term.”
Online sales increased by 12.4% to £31.1m, up from £27.7m in 2014, while the average price per bottle of still wine purchased increased to £8, up from £7.94 in 2014.
“We are well progressed with a major review of the business and we will announce in more detail at the time of our interim results our plans to restore Majestic Wine to profitable growth whilst expanding Naked Wines’ successful business, and crystallising the benefits of the acquisition”, said the company’s chairman Phil Wrigley. “The Board are very focused on delivering results and creating significant value for our shareholders.”