Majestic's shares fall 20% on back of profits warning for financial year
Majestic Wine's shares have fallen by as much as 20% over the last two days after it issued a profit warning saying its overall profit before tax would be flat for the financial year.
The news has surprised the City and trade alike as Majestic has continuously bucked high street trends and returned strong sales growth in recent years whilst its competitors have struggled.
Steve Lewis, Majestic's chief executive, said: "Christmas went pretty well, but immediately Christmas finished the consumer went very quiet indeed. It took us by surprise. February was much quieter than we expected, and that's what's dampened profits."
Whilst its Christmas like-for-like sales showed 2.8% growth, and strong sales of fine wines above £20, conditions have hardened in 2014 and it now expects like-for-like sales to be flat for the year as a whole with analysts reporting annual pre-tax profit of about £23.5m.
Majestic is also not expecting a big turnaround in 2015 but this is partly due to higher internal spending on areas such as staff training, developing its online capabilities with a wider web development, and expansion to its distribution centre in Hemel Hempstead and a new head office in Watford.
Majestic is said to currently hold 4.2% of the off-trade market, according to Nielsen. It opened its 200th store in November and has a target of 330 stores over the next eight years.
Majestic Wine's shares have fallen by as much as 20% over the last two days after it issued a profit warning saying its overall profit before tax would be flat for the financial year.
The news has surprised the City and trade alike as Majestic has continuously bucked high street trends and returned strong sales growth in recent years whilst its competitors have struggled.
Steve Lewis, Majestic's chief executive, said: "Christmas went pretty well, but immediately Christmas finished the consumer went very quiet indeed. It took us by surprise. February was much quieter than we expected, and that's what's dampened profits."
Whilst its Christmas like-for-like sales showed 2.8% growth, and strong sales of fine wines above £20, conditions have hardened in 2014 and it now expects like-for-like sales to be flat for the year as a whole.
Majestic is also not expecting a big turnaround in 2015 but this is partly due to higher internal spending on areas such as staff training, developing its online capabilities with a wider web development, and expansion to its distribution centre in Hemel Hempstead and a new head office in Watford.
Majestic is said to currently hold 4.2% of the off-trade market, according to Nielsen. It opened its 200th store in November and has a target of 330 stores over the next eight years.
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