Market sees sparkle in Majestic Wine performance

Published on Thursday 8 January 2009 20:26

THE fizz may have gone out of champagne sales but cava and other sparkling wines flew off the shelves at Majestic Wine over Christmas.

Majestic, the UK's largest wine warehouse chain, yesterday confirmed that the slump in corporate champagne sales had continued over the festive season, as penny-pinching bosses continued to cut back on spending.

Champagne sales to private customers also fell – by 5 per cent – but the drop was offset by a 25 per cent rise in sparkling wine sales, as customers traded down from French fizz to cheaper Spanish and new world wines.

Overall, Majestic reported a 2.9 per cent fall in UK like-for-like sales for the ten weeks to 5 January.

Steve Lewis, Majestic's chief executive, told The Scotsman that sales to private customers – which account for 80 per cent of the company's business – crept ahead by 0.2 per cent.

But Lewis was realistic over the drop in corporate sales, saying: "Business custom didn't perform so well this Christmas because an awful lot of the corporate gifting that goes on at this time of year just wasn't there as businesses look to control costs.

"I can understand that and I don't think this was the year to be seen buying champagne as gifts for people."

Majestic – which sells wine in bundles of 12 bottles and above – has ten warehouses in Scotland and is on course to open a new "fine wine" store on Edinburgh's Leith Walk at the end of March.

Throughout the UK, the company has 147 warehouses and about 850 staff.

Lewis revealed that Majestic is due to relocate its Glasgow warehouse from Charing Cross to Dumbarton Road and will turn the outlet into another of its fine wine stores.

The shift – which was prompted by a lease ending and is expected to happen in May or June – will put the Glasgow warehouse in closer competition with Oddbins' large store at the foot of Crow Road.

Lewis said Majestic was also in "negotiations" about a further site in Edinburgh.

Over Christmas, Spanish, Italian and sparkling wines sold well in Scotland, along with what Lewis called "branded" wines, such as Rioja.

He added: "In terms of Scotland, it wasn't a universal story but, overall, I was pleased with the performance of the stores."

Lewis said Majestic had coped with the weakness of sterling by hedging its currencies in the autumn and increasing its range of wines from countries outside the eurozone.

He said sales of wine from Chile, New Zealand and South Africa had been especially strong over Christmas.

James Wheatcroft, a broker at Evolution Securities, maintained his firm's "buy" recommendation on Majestic shares following the "Christmas cheer" in its trading update. Evolution trimmed its full-year pre-tax profits forecast from 13.5 million to 12.9m, compared with 16.4m the previous year.

Shares in Aim-listed Majestic closed up 2.5p at 136p.