Despite profits being up 20% at the beginning of the period, Majestic shares dipped slightly this week as the wine retailer announced a cooling off of trading in recent weeks.
Majestic said like-for-like sales were down 1.1% in the six weeks to 7 November, with the result that shares dipped 12p to 403p in early trading yesterday.
The dip came after a healthy trading period in the 26 weeks to 26 September, with profits up 20% to £8.8m and the interim share dividend increasing 15.2% to 3.8p per share.
Analysts remained broadly positive, saying that the key indicators such as new store openings, increase in active customers, and growth in average transaction value were healthy.
David Jeary of Investec said, ‘We reiterate our buy recommendation: the increased penetration of fine wines and increased average still bottle price, together with the rare feat for retailers currently of a positive like-for-like sales trend, show that the Majestic product and service proposition continues to resonate with its customers.’
Other key results announced for the 26 weeks ending 26 September included total sales up 8.7% to £127.8m, like-for-like sales in UK retail stores up 2.7%, and an increase in active customers of 7.7% to 534,000.
Online activity also increased with sales up 8.7% on last year. Online now represents 9% of all the company’s retail sales in the UK.
Majestic’s fine wine arm, Lay & Wheeler, showed profit before interest and tax of £292,000, compared with £77,000 in 2010, and Majestic in France showed profit of £658,000, compared with £574,000 in 2010.
Chief executive Steve Lewis told Decanter.com that Lay & Wheeler should look healthier as profits on Bordeaux en primeur sales were deferred for two years. ‘We have £3m in deferred profit form 2009 and 2010 en primeur.’
Majestic has opened 11 new stores in the period including the six weeks to 7 November. The total number of stores is now 174. There will be three more new openings before the end of the financialf year in April 2012. All new stores now have a fine wine division, selling bottles costing £20 or more.
Lewis told Decanter.com the results of the last six weeks were not to be worried about – and that it is the Christmas trading period that is the most important in terms of sales.
‘October is always a quiet month, very similar to the first two weeks of March. But we do one-third of our total sales for the year in November and December.’
He also said that he was at first concerned that they were losing market share during the quiet months, but that was not the case.
‘Market share was up at the end of September, at 3.9% compared to 3.5% at the same time last year.’
Majestic also announced plans to screen their first television advert.
Written by Adam Lechmere