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Majestic Wine shares rise after ‘trading up’ Christmas

Majestic Wine's share price rose today as the store released healthy trading figures for the Christmas period.

The share price rose 14.68% to £4.25 as Majestic announced total UK store sales were up 8.4% for the nine weeks of Christmas trading from 1 November 2011 to 2 January 2012.

Majestic chief executive Steve Lewis told Decanter.com average spend had gone up, with the average bottle price rising to £7.13 from £6.67 a year ago.

This is in contrast to the national average bottle price of £4.76.

‘People are trading up,’ he said. ‘If they used to buy Pinot Grigio they are going for Fiano or Soave, or a better grower Pinot Grigio. We sold much less wine at £5 a bottle than we expected.’

He said customers were becoming more demanding, more self-confident, and less reliant on brands. The tastings Majestic put on in November were attended by 11,000 people, he said.

Top performers over the Christmas period were Argentinian Malbec and New Zealand Sauvignon Blanc, still the retailer’s biggest seller.

Analysts immediately responded positively, saying the result allayed any fears over the 1.1% dip in sales in the six weeks to 7 November 2011, which caused a drop in the share price.

Investec Securities said the figures showed a ‘typically robust sales performance’ over the Christmas trading period, with analyst David Jeary reiterating his ‘buy’ recommendation.

In November he said the Majestic product and service proposition ‘continues to resonate with its customers’.

Another analyst, Wayne Brown of Collins Stewart, said the performance showed Majestic’s earlier weakness was ‘a blip’.

Commentators noted the ‘tough consumer backdrop’ but said the year ahead had a number of ‘positive catalysts’ for retailers such as the Queen’s Diamond Jubilee in June, the European football championship and the London Olympics.

Written by Adam Lechmere

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