Majestic Wine is defying the high street slump, as strong trading in more expensive wines helped offset a slow start to the year.
The off-licence group has said sales to “commercial” customers were up 13.6 per cent in the year to April 1.
Chief executive, Steve Lewis, told The Telegraph: “Where we’re opening, you find that gastro-pubs and restaurants are coming to Majestic because of the prices and the service we offer.”
Majestic Wine announced an overall drop in annual sales, down 2.1 per cent to £274.4m, which was partly due to the group’s decision to cut back on wholesale trade, as well as the early Easter and lack of Jubilee celebrations.
Even with the drop in total sales, pre-tax profits for Majestic Wine increased slightly to £23.7m and sales of fine wine stood out with a 9.4 per cent increase from last year. Mr Lewis said the group remained confident it could take the chain to 330 locations across the UK, up from the current 193.
Majestic said fine wine from the Rhône, Italy, Spain and Argentina had seen a strong growth in sales and there had been “significant increase” in sales of English sparkling wine.
The success of more expensive wines has no doubt been helped by the company’s new policy of taking smaller orders online, with a higher proportion of fine wines and champagne bought on the web in orders of less than 12 bottles.
The company said it had cut its minimum order for delivery to six bottles “to broaden the appeal of our online offering” and successfully increased sales by 14.7 per cent.
Fine wines, priced at £20 and above, also make up 6.5 per cent of UK store sales. Chairman Phil Wrigley said that the company plans to continue rolling out fine wine fixtures to every suitable store during the course of the financial year.
Mr Wrigley said the company was “well placed to maximise sales over the important summer trading period”.
He added: “Majestic is trading in line with our expectations, though as anticipated the year has started slowly reflecting the timing of Easter and the boost given to last year from the Jubilee celebrations.”
The board recommended a final dividend of 11.8p a share, bringing the overall dividend for the year to 15.8p a share, a rise of 0.2p on last year.
Shares dropped by 1.5 to 453p in morning trading after Majestic Wine announced its annual results.
Sanjay Vidyarthi, city analyst at Espirito Santo Investment Bank, said: “We think that Majestic has a strong business model and excellent long term growth prospects. However, it does not feel like the volatility in trading seen in 2013 is going to change any time soon.”
Previous Post
Boris Johnson Hails Latest London Landmark
