Retail: Profits flat at Majestic Wine after New Year sales hangover

Majestic Wine posted broadly flat profits of £23.8million today as it counted the cost of a New Year hangover in consumer spending.

The retailer described trading conditions as challenging and said its rate of online growth had slowed due to new entrants to the market.

Total sales rose 1.4% to £278.2m in the year to March 31 but like-for-like sales were 0.1% lower due to a poor January and February as consumer spending was subdued following strong Christmas trading.

Majestic said: “The market in which we operate remains very competitive and is dominated by the large supermarkets. The market has declined slightly in volume terms over each of the last three years although it has continued to grow modestly in value.”

It blamed inflationary pressures on alcohol duties which have risen from £1.81 per bottle three years ago to £2.05. Costs have also been rising around the world as harvests have been weaker due to poor weather combined with rising demand particularly in the Far East.

Majestic said its share of the market as measured by Nielsen increased by 0.1% to 4.2% over the year to the end of March.

The average bottle price of still wine purchased at Majestic rose to £7.94, up from £7.56 last year whilst average spend per transaction increased by £1 to £129. It achieved an increase in the number of active customers who made purchases in the last twelve months to 643,000, up 2.9% on last year.

The retailer reported a significant lift in sales of Rose from Provence up 84% and Malbec from Argentina, Chile and France up 50%. Sales of still wine priced at £20 per bottle and above grew 19.7% to £18.7m.

Majestic said it continued to see the opportunity to increase the size of its retail estate to around 330 locations nationwide. A new distribution facility is expected to be fully operational by the end of this month.