Majestic Wine expected to feel chill of competition

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STIFF competition is expected to have trimmed margins at Majestic Wine as the drinks warehouse chain prepares to unveil full-year results tomorrow.

The City still thinks the firm will post a small rise in profits, having overcome last year’s damp summer.

Analysts at house broker Investec Securities have pencilled in a 1.7 per cent rise in profits to £23.6 million for the year to 31 March.

Such an increase would lag behind the 14.5 per cent rise posted for the previous 12 months.

Majestic, which runs 189 wine warehouses and generates about 10 per cent of its sales from its website, posted a 4 per cent rise in half-year profits following what analysts characterised as “good Christmas trading against a challenging backdrop”.

Yet chairman Phil Wrigley warned: “We recognise that the environment in which we operate is likely to remain challenging.”

Like-for-like sales grew by 1.1 per cent in the UK during the seven weeks to 31 December, helping sales for the first 39 weeks of its financial year to reach 0.8 per cent.

Chief executive Steve Lewis added: “While we saw encouraging sales growth over the period, the Christmas trading season was challenging with many consumers leaving their shopping until the very last moment.”

Investec also expects full-year like-for-like sales at Majestic – one of the few stocks on the Alternative Investment Market to pay a dividend – to grow by just 0.75 per cent, compared with 2.6 per cent for the previous 12 months.