English sparkling wine sales help top up Majestic pre-tax profits

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Britons have developed a taste for English sparkling wines, a legacy of last year’s summer of celebrations, Majestic Wine said as its pre-tax profit edged up.

“It started with the Royal Wedding two years ago, bolstered by the Jubilee and the Olympics,” said Steve Lewis, chief executive, of the increased demand.

Majestic sold more than £1m of English sparkling wine last year, up 2 per cent on the year earlier.

“This is not inexpensive wine. This retails at £28-£29 a bottle. It seems to have captured consumers’ imagination,” he said of the wine, mostly produced in West Sussex and Kent. The best seller was Nyetimber, produced in West Sussex, which sells at £28 a bottle.

Mr Lewis said sales of fine wines, still wine retailing at more than £20 a bottle, were also up 9.4 per cent year on year, as the trend towards entertaining at home continued.

“People are buying at £20 to £30 a bottle to consume at home, and a lot of them are entertaining at home,” he said.

Pre-tax profit rose from £23.2m to £23.7m in the year to April 1. Total sales fell 2.1 per cent to £274.4m, as Majestic withdrew from the wholesale market to step up its retail expansion.

Underlying sales, excluding wholesale, rose 2.6 per cent to £268.6m, while sales from UK stores open at least a year rose 1 per cent.

The number of customers rose 56,000 to 624,000, although average spend per transaction was maintained at £128.

Mr Lewis said Majestic was looking to further expand its stores. The chain opened 16 stores in the year to April, taking its estate to 193. Majestic would open a further 16 this year, and saw scope for 330 locations in the UK.

“We are that rare thing, a retailer who is expanding,” he said.

The final dividend is maintained at 11.8p, making a total for the year of 15.8p, up from 15.6p in the year earlier.

Diluted earnings per share rose from 26.1p to 26.6p.

Majestic said current trading was “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”.

However, Mr Lewis noted that June, July and August last year were subdued because of the wet weather and the fact that many consumers had celebrated the diamond jubilee.

“We think its all to play for,” he said.

Philip Dorgan, analyst at Panmure Gordon said: “The current trading statement is actually reassuring, with sales volatile, but good control of margins and costs.”

The shares rose 1.6 per cent to close at 462p.

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