UK retailer Majestic Wine has reported sales of £461.1 million for 2017, which represents an 11.4% increase year-on-year.
Overall, however, the company posted a pre-tax loss of £1.5 million, down from £4.7 million in 2016, as a result of investments and acquisitions.
Investment Plans
The specialist wine retailer has made significant investments in recent years as part its transformation plan, including the acquisition of Naked Wines in 2015.
Rowan Gormley, group chief executive, said that the company is "past the tipping point, both financially and operationally", and so remains confident about the company's outlook.
"We are through the most risky and cost intensive phase of our transformation plan," he said. "We have a business that is better able to weather the uncertain trading environment, with a
sustainable growth model."
Supermarket Competition
Tom Berry, retail analyst at GlobalData, said that the improved quality and competitive prices of supermarket wines, particularly from Aldi and Lidl, "continue to threaten" Majestic's business.
However, the retailer launched its first entry level own brand range in response to this competition. The Majestic Loves range is priced at £5.99 a bottle.
Berry notes that another issue was staff retention, as "top performers have been frustrated by the lack of career growth available once reaching store manager level".
In response, Majestic has introduced a partnership programme which offers managers a greater percentage of their store's contribution. Berry said that this will give the company a "specialist edge over the grocers".
Future Projections
Majestic said that it expects the group rate of sales growth to drop from double digit to low-mid single digit figures for the 2018 fiscal year, but that it will accelerate thereafter.
Although managing director John Colley and chairman Phil Wrigley have both announced that they are leaving Majestic, Berry said that the company is in "far better shape" than it was.
"We expect growth to continue as the transformation plan bears fruit and consumers continue to favour customer service and experience to ensure value for money," he concluded.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.
