Majestic’s chief pops the corks as new warehouse opens in capital

MAJESTIC Wine chief executive Steve Lewis could be forgiven for cracking open a special bottle this weekend after signing a deal on his latest store in Edinburgh, keeping him on course to have more than 20 across Scotland.

He is looking for sites in the Borders, south Aberdeen, the Moray Firth coast and areas surrounding Glasgow.

The chain already has 13 stores in Scotland, and will have 179 across the UK as a whole by the end of the year.

Majestic’s latest warehouse in the capital will open in March on the site of a former filling station on Queensferry Road, alongside a small supermarket and a number of other retail plots.

Securing the site tastes all the sweeter for Lewis after the wine merchant was knocked back by the city council after it had unveiled plans to open a store near Edinburgh Zoo on Corstorphine Road.

That setback sent the chain looking for alternative sites around Edinburgh, which led to a warehouse being opened this year at Livingston. Yet Lewis is already “extremely pleased” with the performance of the West Lothian store and with the other branch the company opened this year, in Dundee.

His plans do not stop at the Border, though: a warehouse in Berwick-upon-Tweed will also open in March and will be supplied with stock from its Scottish distribution centre.

Lewis’s expansion plans have been given a shot in the arm after the company changed its strategy in 2009, reducing the minimum purchase its customers must make from a 12-bottle case down to six.

“Moving from 12 to six bottles has slashed a year off the time it takes for our stores to start making money,” Lewis explained. “We used to expect that a store would lose money in the first year, break even in the second and then start making money in the third.

“Now our stores are breaking even in their first year and making money in the second.”

Responding to the recession and the changing tastes of drinkers is also bringing fresh faces through Majestic’s warehouse doors.

“The switch has also changed the demographics among our customer base,” Lewis added. “We’re now seeing more young professionals and recently retired couples visiting our shops.

“The car parks used to be full of Audis, BMWs, Mercedes and Volvos but now we’re seeing more hatchbacks in there too.”

Shares in Aim-quoted Majestic have taken a hit since its interim results were published earlier this month.

Despite pre-tax profits rising by 20 per cent to £8.8 million on the back of an 8.7 per cent increase in turnover to £127.8m, traders focused on a poor fortnight for sales in October, from which Lewis said Majestic had bounced back.

But the chief executive is upbeat about the outlook for the business, with trading already picking up in the run-up to the key Christmas period. “We’re one of the very few retailers that the market is pricing in as a growth story, on a price-to-earnings ratio basis,” Lewis said.

“That puts us in good company with Ted Baker and Carphone Warehouse.”