Profits fall at Lay & Wheeler owner Majestic Wine
- Credit: Archant
A “good but not great” Bordeaux vintage impacted on Majestic Wine today as it reported lower profits despite a sales surge at its wine warehouses.
The cost of moving to a larger distribution centre at Hemel Hempstead and investment in IT were also a factor as pre-tax profits fell 10.5% to £8.5million in the six months to September 29.
Its fine wine business Lay & Wheeler, based at Holton St Mary, near Ipswich, saw profits slump 78% to £127,000 due to a disappointing Bordeaux 2013 campaign, which also impacted on the sale of other vintage wines.
Trends at its 210-strong wine warehouse business were better as Majestic’s half-year sales lifted 5.7% to £124.9million on the back of demand for rose wine from Provence and Malbec from Argentina, which leapt 41%.
Its like-for-like sales at UK stores improved 2.8%, while it also opened shops at Leighton Buzzard, Hexham, Loughton and Addlestone during the period. It has added two more, at Tiverton and Wrexham, since the close of its half-year trading and plans to open three more shops before Christmas.
Majestic said its number of active customers lifted 1.9% to 643,000, while the average spend per customer rose 2.4% to £130.
It added that the price of the average bottle of wine lifted 4% to £8.02, and sales of fine wine - priced at over £20 a bottle - jumped 22% to £9million.
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Chief executive Steve Lewis said: “The 2015 financial year is one of investing to put in place the building blocks to deliver future growth and shareholder value and we are progressing to plan.”
Analysts at Investec upgraded their rating on the firm to buy.
The said: “Encouragingly, UK retail stores like-for-like sales up 2.8%, active customers up 1.9% and online sales up 12.3% should reassure that the core business is healthy and solid.”