Majestic sets out £12m investment to net new customers

Majestic Wine is to invest £12m in enlarging its customer base, admitting in a statement that the opportunity to invest in new customer acquisition was “materially bigger than previously thought”.

Rowan Gormley, CEO of Majestic Wines

The company behind Majestic and online service Naked Wines said in a statement that it intends to invest up to an additional £12m to grab new business, which will reduce its earnings in its 2019 financial year by up to £3m, but will result taking its “annual generation of future value from £48m to £80m-plus a year”, it said.

It will see the group raise its initial planned investment from £9m to £12m. Of that sum, £7m to £10m will be “directed at growth” and £2m will “ensure we drive growth safely”.

“We are in the fortunate position of having the option to accelerate growth by investing in new customer acquisition,” said Rowan Gormley, CEO. “We are starting from a good place with the core business on track to meet our 2019 sales target of £500m and the market’s expectation for profits and dividend in FY18.

“In the last 3 years, we have doubled sales at Naked Wines and delivered profitability in all 3 markets (UK, USA and Australia) – after increasing investment in new customer acquisition. We believe we can double the level of investment again while maintaining the returns, driving sustained growth in shareholder value.

“On a risk / return basis, the case for accelerating investment is clear. We can measure success in months while delivering returns over years. This is the right thing to do to maximise shareholder value.”

The statement also included an update on the group’s sales, which Gormley has said are on track to hit £500m by 2019.