Further setback for Suffolk-based fine wines firm Lay & Wheeler
- Credit: Archant
Majestic Wine today reported an “encouraging” first half despite a further setback for its Suffolk-based Lay & Wheeler business.
The acquisition of Norwich-based Naked Wines in April saw group sales for the 26 weeks to September 28 grow by 36% compared with last year’s first half to £181.6million, with underlying sales growth of 6% excluding the newly-acquired business.
Bottom line pre-tax profit fell by half from £8.5m to £4.3m, largely reflecting acquisition costs and increased finance charges. However, on an adjusted basis, excluding one-off factors, the pre-tax figure was just 1% lower, at £8.4m.
The core Majestic Wine retail business saw sales grow by 5% and profits by 4%, with increased revenue being partly offset by costs reflecting the firm’s legacy store opening programme, while the group’s commercial business grew sales by 8%.
The store opening programme has now been scaled back to a target of 230 sites, against a current total of 211, compared with previous plans for a network of 330 stores, as part of a three-year transformation strategy placing the emphasis instead on driving sales and customer acquisition.
Naked Wines, an online crowd-funding platform for independent winemakers which enables drikers to buy exclusive wines at preferential prices in exchange for supporting the makers, continued to its strong growth, with sales up by 35%.
Lay & Wheeler, group’s specialist fine wine business which is based at Holton St Mary, between Ipswich and Colchester, grew sales by 23% due to a strong performance in En Primeur, the process of purchasing wines early before they are bottled and released on to the market.
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Despite this, however, Majestic said Lay & Wheeler had “barely turned a profit”, missing its goals for the business and resulting in a £2.6m impairment charge. In the 12 months to March 31, a £500,000 write-down in stock value saw Lay & Wheeler slump to a loss of £100,000, against a profit of £1m the previous year,
Majestic Wine chief executive Rowan Gormley, who took the helm in April having joined the business with Naked Wines, which he founded in 2008, said that investment in the new strategy would impact of profits for the full year.
But he added: “Six months in to my new job it is clear to me that we have a solid core business at Majestic, and two great growth engines in Naked and our commercial business.
“We have a clear plan, which will require investment and take three years to complete, but will also deliver a better business that can create sustained growth in shareholder value.”
As previously announced, there will be no interim dividend.