Strong festive sales at Majestic vindicate Gormley strategy

By Mathew Lyons

Published: 07 January, 2016

Sales at Majestic Wine plc were up 12.2%, according to trading figures from the group released today.

The headline figure excludes sales growth due to the £70 million acquisition of Naked Wines last April - which pushed actual sales up 42.6% - as well as movement in en primeur sales and the effect of variable exchange rates.

The results appear to vindicate the group's strategy under new chief executive Rowan Gormley, who joined from Naked Wines.

Sales in Majestic's retail arm grew 7.3% over the Christmas period, a marked improvement on the previous year, when sales fell by 1.7%.

Like for like sales in mature Majestic stores were one of the principal challenges Gormley faced when he took over at the helm, having been in decline since 2011.

The Naked Wines business continues to go from strength to strength, posting 28.9% growth over the ten-week period.

Majestic's commercial arm grew 10.2%.

The Christmas sales figures are a marked improvement on the group's half-year results for the 26 weeks to September 28, during which profits were slashed by 50% to £4.3 million.

However, Gormley has failed to arrest a fall in sales at Majestic's Lay & Wheeler fine wine arm, which declined 3.5%, suggesting his stated intention of repositioning the business away from the unpredictable en primeur trade still has some way to go.

Gormley said: "This is an encouraging result. Majestic Commercial and Naked Wines continued to grow strongly, and I am particularly heartened to see the Majestic Retail business grow as the impact of our better pricing, better service and better looking stores starts to take effect.

"We remain focused on our values of looking after our brilliant teams and suppliers and thank them for their support during the initial steps of transforming Majestic into a truly fantastic business."

Hannah Maundrell, editor-in-chief at www.money.co.uk, said: "The nation was in a celebratory mood this Christmas with a little extra cash in their pockets and house parties aplenty. Staying in is definitely the new going out and, with pub sales in decline, Majestic Wine has cashed in on this new trend.

But Majestic Wine can't rest easy. It needs to continue working hard to stand up against Aldi and Lidl's ever-popular cheap-wine offerings.

"The chain should look to champion itself as the M&S of wine by carving out a niche as a go-to specialist that offers affordable luxury."

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