UK wine group Majestic Wine has posted sales growth of 6.8% in the ten-week period to 31 December.
Group gross profit growth was 8.2% in the period, despite a ‘challenging UK retail market’, the group said.
Majestic Wine said that it delivers c.30% of total annual sales during the Christmas trading period.
Retail Performance
The group’s retail division was up 1.5% compared to the same period the previous year, again set across a challenging market backdrop.
‘Retail, in common with the rest of the UK sector, encountered difficult trading conditions amidst economic uncertainty and weak consumer confidence,’ the group said.
‘While sales were up 1.5%, reflecting growth in our online and Concierge propositions, and we grew market share, gross margins were 1.2 percentage points lower year-on-year in a very price promotional market.’
Its Naked Wines business saw a 15.9% increase in sales.
On a regional basis, sales were up 12.2% in the UK, 21.0% in the US and 14.8% in Australia.
Retail Revolution
“As we said in November, consumer behaviour is changing and we're seeing a revolution in retail,” said Rowan Gormley, the group’s chief executive.
“We think there will be winners and losers, and we believe we have what it takes to be one of the winners. We are uniquely placed, with the people, data and skills in place to succeed despite the headwinds we are seeing.”
Gormley added that while trading was “challenging” over the Christmas period, “the trends we reported in November are the same (namely strong growth in our overseas markets and our digital propositions but headwinds for our UK Retail stores). We look forward to setting out more of our future plans for the group, including the Retail business with our full year results in June."
Analyst Viewpoint
Commenting on the business' performance, Thomas Brereton, retail analyst at GlobalData, said, "From the retail division’s point of view, Majestic Wine has indeed done well to remain buoyant, particularly as the Big Four heavily utilised promotions on alcohol over the same period; furthermore the discounters, particularly Lidl, continue to push their impressive alcohol propositions at the increasing number of customers coming through the doors – and so for Majestic to continue to convince shoppers to make exclusive, separate visits to its stores remains impressive.
"For 2019, Majestic Wine are in a good position to continue its growth path. Its customer-centric approach is a good one, and recent store visits show that it is working – staff are knowledgeable and engaging with customers, and stores have an appealing structure, with wines organised by country presenting a much more experiential shopping visit than its rivals."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine
