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Majestic profits up as French business bounces back

Majestic Wine has posted an impressive increase in profit and customers in its latest financial statement.

For the year ending 28 March, the 165-store wine retailer announced that its group profit before tax increased by 26.6% to £20.3m, compared with £16m last year.

Almost every operation of the chain has shown an increase over the past year. Sales are up by more than 10%, total dividends are up 26.2%from 10.3 pence to 13 pence.

Lay & Wheeler, the fine wine merchant that Majestic bought in 2009 has also shown a healthy rise, with profit before interest and tax standing at £701,000, as compared to £23,000 last year.

Even Majestic’s three French stores, Wine and Beer World –which were blamed for an overall 50% slump in profits in June 2009 – showed like for like sales growing £23.6%, with profit before interest and tax rising to £1m.

There are other indications of the company’s robust health:customer numbers have gone up, as has the average price of a bottle – from£6.56 to £6.94.

Sales of fine wine – bottles over £20 – have gone up by23.7%, and sales to business customers when up by 17% and now represent a quarter of all Majestic’s UK sales.

Chief executive Steve Lewis said, ‘We are delighted that so many new customers have chosen to shop with Majestic and are encouraged that all parts of the business are showing strong progress.’

One area that commentators feel could be more robust is online sales, which increased last year but still only represent 10% of UK sales.

‘If I was being critical they should be further down the track on their online business,’ analyst Greg Feehely of Altium Securities told the Guardian newspaper.

Majestic remains in a unique position, blogger the Motley Fool said. While supermarkets have almost driven the independent high street retailer out of business, it retains its presence.

‘The mainstay of Majestic’s business remains the Volvo-loading expedition. With the average price of a bottle of still wine just under £7, the average spend per transaction equates to 18 bottles.’

Majestic also announced it was ‘confident of being able to expand … to an estate of at least 330 stores,’ it said.

Written by Adam Lechmere

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