THE UK’s largest wine warehouse chain has said that it wants to double in size as it announced a rise in profits.
AIM-listed Majestic Wine yesterday reported profits before tax of £20.3m for the year to March, a 26.6 per cent increase on £16m profits the previous year.
The company, founded with a single London store in 1980, now has 165 UK stores and yesterday said it wants 330 over the next decade.
The firm, with like-for-like sales growth of 5.3 per cent in the past 12 months and total sales up 10.3 per cent at £257.3m, wants to open stores at a rate of 12 a year.
It cut the minimum order from 12 bottles to six in 2009, saw strong growth in sales of Argentinian and New Zealand wines, and Italian sparkling Prosecco, while fine wines, priced £20 per bottle and above, were up 23.7 per cent.
David Jeary, an analyst at broker Investec, said Majestic’s forecast-beating results were down to the positive reaction of customers to the reduction in the minimum purchase from 12 to six bottles.
Chief executive Steve Lewis said the company had seen quite a change in its customer demographic since the minimum purchase quota had been cut, adding: “We still have the classic Majestic customer – the BMW or Mercedes driver – but we’re also seeing a much younger customer because six bottles makes it much more accessible.”
Mr Lewis said Majestic was also selling more wine to party organisers, as the company can offer free delivery, ice and beers, as well as wine.
The company said while average spend per customer was down 2.5 per cent to £126, the number of customers increased by 8.2 per cent to 511,000 in the year.
The average price of a bottle of wine was £6.94 in the period, up from £6.56 the previous year.
Fine wines make up six per cent of all sales.
Majestic has continued to see strong trade – reporting 4.4 per cent like-for-like sales growth in the ten weeks to June 6.
French wines are still the most popular, making up 34.4 per cent of Majestic sales, led by wines from Bordeaux, Burgundy and the Rhone.
Business customers – sales to restaurants, hotels and gastropubs – were up 17.2 per cent on the previous year and represent 24.2 per cent of total UK sales.
Online sales were up 9.6 per cent on the previous year and now represent 10.2 per cent of all sales.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here