Majestic profits up 9% as Lay and Wheeler shows profitability

Increased sales of wines from South Africa, New Zealand and Spain helped retailer Majestic Wine to a 9% rise in pre-tax profit for the six months to the end of September.

And the company, which saw like-for-like UK sales lift by 5.4% over the same period, expects business to be further boosted by the introduction of a six-bottle minimum purchase – as well as the closure of hundreds of Thresher and Wine Rack shops.

Majestic chief executive Steve Lewis said the retailer could only benefit from the demise of First Quench Retailing, which went into administration at the end of October. More than 370 stores are to close by early December, with buyers being sought for 830 more.

Increased sales of sparkling wines helped Majestic to post sales of £106.7m, up £12.6m on the same period last year and boosted by a £6m contribution from new acquisition Lay and Wheeler.

Online sales soared by 24.6%, while fine wine sales (above £20 per bottle) were up 14.4%, taking Majestic’s average still wine bottle price to £6.41 and its half-yearly profit to £6.1m. Like-for-like sales for the five weeks to 2 November were up 6%.

Achilles heel French outlet Wine and Beer World continued its decline however, with sales down 31% to £3.6m.

‘It is encouraging that in the current economic conditions our loyal customers continue to find the Majestic proposition compelling,’ said Lewis.

Chairman Simon Burke added that the company’s reduction of its minimum in-store purchase to six bottles on 1 September had so far been ‘encouraging’, with a small reduction in average spend more than offset by an increase in sales volumes.

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Written by Richard Woodard