The Week Ahead: Figures due from Whitbread and Majestic Wine

Rowan Gormley founder of Naked Wines, who is now at the helm of Majestic Wine.

Rowan Gormley founder of Naked Wines, who is now at the helm of Majestic Wine. - Credit: Archant

Budget hotels to coffee shops group Whitbread is expected to post rising sales again this week while elsewhere the City will watch to see if a new boss can put some fizz back into wine merchant Majestic.

Premier Inn and Costa coffee owner Whitbread is expected to report more rising sales when it updates the City on first quarter trading on Tuesday, weeks after announcing the appointment of a top banking executive as its next boss.

Alison Brittain, head of retail at Lloyds, will take over from current chief executive Andy Harrison, who is due to retire in February.

Mr Brittain has overseen an expansion of the business helping profits for the year to February 26 rise to £488.1million.

Unveiling the results earlier this year, described by the chief executive as “outstanding”, Whitbread mapped out plans to grow its Premier Inn chain from 697 to as many as 900 by the end of 2020.


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It is also targeting growth at Costa, pencilling in a rise in annual sales from £1.4 billion to £2.5bn over the same period.

The group said the achievement of its milestones for the two brands would create 15,000 jobs in the UK over the next five years.

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Ms Brittain will become one of just a handful of female FTSE 100 bosses, but City reaction to her appointment has not been universally positive.

Retail expert Nick Bubb described her as a “rank outsider for the role” and shares fell 1% on the announcement in May.

Numis analyst Wyn Ellis said Whitbread’s first quarter figures would be up against touch comparatives from last year, when Premier Inn saw like-for-like sales rise 9.5% and Costa posted an increase of 4.5%.

But he still expected a “solid” update for the quarter with the group showing “positive strategic progress”.

Mr Harrison said in April at the full year results announcement that trading in the new financial year had “begun on plan, with good momentum for Premier Inn and Costa”.

Whitbread’s restaurants business, which include Beefeater and Brewers Fayre, was also “trading slightly ahead of a subdued market outside the M25”, he said.

Brokers at Morgan Stanley have pencilled in overall like-for-like sales growth for the first quarter of 5.5%, with Premier Inn expected to be up 8% and Costa by 5%, all a little slower than the pace of annual growth for 2014-15.

The City will get its first look at the new boss of Majestic Wine when he presents the retailer’s annual results tomorrow, and will hope to hear how he plans put some fizz back into the business.

Rowan Gormley joined Majestic after it bought online rival Naked Wines for up to £70million, a company he had founded and run since 2008.

Naked Wines started as a crowd-funded business, coming to have around 300,000 subscribers helping fund more than 130 independent winemakers in 14 countries in exchange for access to exclusive wines at preferential prices. It generated sales of £74m last year, up 40% on a year ago, but made a loss of £3.3m.

Brokers at Investec expect full-year pre-tax profit at Majestic Wine to fall 11.7% to £21m, after a challenging Christmas period which saw it forced to cut margins and increase promotions to lift sales.

But shares have jumped 40% in Majestic since the deal with Naked was announced in the spring, on hopes that Mr Gormley can inject some entrepreneurial zest into the retailer that was launched from a single store in London’s Wood Green in 1980.

Brokers at Investec hope that Mr Gormley will use his brand building experience to exploit the group’s database of 640,000 active customers. They also hope he will end the firm’s plans to expand to 330 stores from its current 213, instead using the cash to boost its IT systems.

The analysts have also suggested the business could be more flexible on its wine sales, pointing out that the last time it saw sizeable volume rises was in 2009, when it lowered its minimum sales policy to six bottles from 12, and speculating whether now may be the time to lower the threshold or remove it.

The newly-enlarged firm has said the merger will boost Majestic’s online presence, while providing Naked Wines with a nationwide store network to allow a click-and-collect delivery option for its customers.

Mr Gormley replaced Majestic’s Steve Lewis who left the retailer after six years in February following poor sales. Mr Gormley has previously helped found a number of firms including Virgin Wines, Virgin Money and the Virgin One account.

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