Majestic Wine to rebrand as Naked amid major store sell-off
UK specialist retailer Majestic Wine has announced it will close stores and rebrand as Naked Wine as it concentrates on its online business, despite CEO Gormley insisting the recently transformed Majestic business had “the potential to be a long-term winner”.
In a statement this morning, the company announced it would refocus the business on the “significant growth opportunities in Naked Wines”, by releasing capital from its Majestic Retail and Commercial operations through the sale of some of its 200 stores as well as unspecified assets.
Currently, the company is made up of four arms Majestic Retail, Naked Wines, Majestic Commercial and fine wine specialist Lay & Wheeler but the company confirmed that the new Naked Wines group will operate as one group with one management team and ‘one focus’ – accelerating the growth of Naked Wines.
More details of the number of store closures and job losses will be unveiled in June, along with the company’s full-year results.
The surprise announcement marks a major departure from its previous business plan, which invested heavily in revamping the Majestic store estate and enabling its store managers to spend more time with customers – although the announcement claims this is the “next phase in its evolution”.
Group chief executive Rowan Gormley today said the company’s plans to focus all its capital and energy into Naked Wines and releasing value from Majestic were “well-advanced”.
“It is clear that Naked Wines has the potential for strong sustainable growth, and we will deliver the best results for our shareholders, customers, people and suppliers by focusing all our energies on delivering that potential.”
“We also believe that a transformed Majestic business does have the potential to be a long-term winner, but that we risk not maximising the potential of Naked if we try to do both.”
“Where we have no choice but to close stores we will aim to minimise job losses by migration into Naked.”
As part of the new business plan, stores that are retained will be renamed Naked Wine, with spend being ramped up on new customers, including the launch of a new ‘face-to-face recruitment channel”, while existing Majestic customers will be “migrated to the Naked brand”.
Half the group’s business (45%) is now online, it said, with international sales contributing around 20% of the total, with further significant growth potential, particularly in the US. Meanwhile Naked Wine has more than doubled in size since it was acquired by Majestic in April 2015, with a portfolio of 200 winemakers, and sales expected to exceed £175m this year.
This brings total sales since acquisition to nearly £600m, it said, with repeat customers contributing around £40m a year, enabling it to invest around £20m in the growing the customer base further. This will rise to £26 million in the next financial year.
Sales for the group are expected to hit its £500m target in the 2019 financial year, it said, with restructuring charges of up to £10m, and potentially substantial cash restructuring charges from FY20 onwards.
For db’s analysis of the news, please see here: