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Majestic Wine in advanced talks over sale

Majestic Wine has said it is in 'advanced discussions' to sell its entire retail business this summer and rebrand as Naked Wines in order to capitalise on online and US sales growth - but it is expected that a buyer will invest in the standalone Majestic store network.
  • Retail arm, which currently has around 200 stores, to be sold off as parent company rebrands to Naked Wines
  • Retail MD says standalone Majestic ‘here to stay’ amid expectation that buyer will invest in business
  • Group sinks into red for financial year due to impairment charge, despite 6% sales increase
  • Chairman to stand down in August

Majestic said today (13 June) that it was close to selling its entire ‘retail and commercial’ division, which includes around 200 stores. There were ‘multiple bidders’, Decanter.com understands.

The group did not name potential buyers, although one was reported by Sky News to be US-based Elliott Advisors, which owns Waterstones bookshops in the UK.

Majestic reiterated that, if a sale goes through, the remaining business will be renamed Naked Wines Plc and the plan would be to accelerate investment in online sales and in the US, which is now the group’s biggest sales market.

Joshua Lincoln, MD of Majestic Retail, told Decanter.com that Majestic was ‘here to stay’ on the UK high street and that prospective buyers had indicated they would invest in the newly standalone wine retail business.

He highlighted Majestic Retail’s 1.5% net sales growth in the company’s financial year to 1 April 2019 as evidence of the division’s relative strength in a tough environment for retailers in general.

‘It’s not a massive percentage number but it’s a lot of money,’ he said, adding that Majestic’s retail arm and Naked Wines could both perform better as separated entities.

Majestic Wine  CEO Rowan Gormley said earlier today, ‘Although we have several options to realise value from Majestic, the cleanest and best for customers, staff and shareholders currently looks to be an outright sale at this time.’

Gormley founded Naked Wines and saw Majestic buy the business in a £70m deal in 2015. He became CEO of the merged group.

He said today that the business was at a ‘crossroads’, but that it was making strategic decisions from a position of strength.

Overall group sales rose by around 6% in the year to 1 April 2019, to £506m, versus £476m in the previous year.

Within that, Naked saw sales rise by 14.5% to £178.4m and Majestic’s retail arm saw sales increase by 1.5% to £267.7m.

But the group as a whole sank to net losses of £9.4m for the fiscal year, compared to profits of nearly £7.4m a year earlier.

Operating losses for the most recent year amounted to £7.7m, with accounts showing a significant rise in administrative expenses.

The group said that it was ultimately plunged into the red by a £11.1m impairment charge, largely related to its retail store estate, ‘due to the weaker profitability of the business’.

Any end-of-year dividend for shareholders was frozen, pending the sale of Majestic.

The firm also announced that its chairman, Greg Hodder, would be stepping down in August, to be replaced by John Walden, an American businessman with significant retail experience, and a previous CEO of Argos.

If a sale of the retail arm is not agreed this summer, the combined business will continue in its current form through the key Christmas selling season and revisit the proposed break-up in 2020, the company said.

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