Majestic Wine hails sales boost as transformation plan bears fruit

Chief executive Rowan Gormley said the latest results showed its turnaround plan, aimed at lifting annual sales to £500m, was starting to bear fruit.

Total sales increased 11% to £402.1m, including those from Naked Wines, which Majestic bought in April 2015.

Top-line pre-tax profits of £15m were 30.3% down on the same time last year, after investment in the transformation plan, and bottom-line pre-tax profits of £4.7m were 74.5% down on the same time last year, following costs related to Majestic’s acquisition of Naked Wines.

While profits did take a hit due to the acquisition costs, the level of investments in the business for FY2016 would have still eroded the figures.

Majestic Wine has seen the first growth in sales for four years but new chief executive Rowan Gormley admitted it still hasn’t got everything right and has plenty of distance to go.

“We still have lots to do and although we are on course to deliver our three year plan, it won’t be without challenges. There is no sales growth in the market so we can only get growth at the expense of others and they are tough, experienced competitors, so that’s hard”.

Net sales for the year jumped by 41% versus the previous 12 months, to £402m, thanks largely to the firm’s acquisition of Naked Wines. “In the USA alone, our customer attrition rate in the past year has fallen 20% thanks to these new measures”.

Luke Jecks, the managing director of Naked Wines, said that the growth was being driven by the United States market. In the U.S. we had 49% growth in sales and in Australia we had 5% growth.

The re-calibration of the recruitment model included a change in price points for the wines on offer and focusing on higher quality customers that were more engaged with the Naked Wines community. “Our plan however remains unchanged, as does our goal – GBP500 million sales by 2019”, he added. The management reorganisation is now complete, I am delighted with the teams we have in place across the group.