City support for Majestic remains strong, says boss
Support for Majestic’s model among City investors remains as strong as ever despite it posting a moderate profit rise dampened by it’s decision to stop supplying wholesale businesses, according to its chief executive.
Pre-tax profits for the year to April 1 reached £23.7 million, up £500,000, on total sales down 2.1% to £274.4 million due to a planned exit from trading with wholesalers, said Steve Lewis. The move was driven by low returns and a desire to step up its more lucrative business arm which offers direct sales to restaurants and hotels.
He said: “The results have been well-received by the City. We are a rare thing because we are a retail growth story with a long-term roll out plan that will last at least eight years. We currently have 193 stores with a total target of 330. We wanted to get out of wholesale, which we have now done because it was a large volume, low value business. But sales to managed accounts such a restaurants, hotels and gastro pubs are up 14% to £31 million. This is a big growth opportunity for us.”
The retailer delivered on its target to open 16 stores in the last year with Havant the next town to see a Majestic opening.
In-store sales increased 1% with the average price of a bottle reaching £7.56 from £7.34, while the average basket spend remained at £128 per visit. Online saw a 15% surge, now accounting for 11% of Majestic’s total sales. Fine wines, which it defines as still wine above £20, also grew 10%.
Lewis said the retailer remained focused on managing margin and cost and would not be drawn into deep discounting.
He added: “We aren’t prepared to throw away margin and get into a race to the bottom. We are not going to give wine away. We control costs very well and are a quality operator. Trading will be the same as it was last year and consumers are increasingly savvy. But they understand quality.”