Majestic Wine reinstated its dividend and insisted its transformation plans are on track, despite swinging to a loss in its first half.
The British wine retailer reported a pre-tax loss of £4.4m in the six months to September 26, which it blamed on costs relating to the £70m acquisition of Naked Wines, and increased investment.
Revenues increased 13 per cent compared to the same period last year, to £205.6m. Last year Majestic announced an ambitious plan to increase sales to £500m, and the company said “from now on we are confident that future sales growth will translate to profit”.
The company had already warned that profits this year would be lower than previously expected, after an unsuccessful attempt to establish the company’s Naked Wines club in the US led to the worst day of trading in its history, with shares dropping more than a quarter.
Peter Smedley, analyst at Panmure Gordon, said the board had struck a confident tone on the back of some “pleasing progress”, but stressed that the turnround at Majestic’s retail business “will be highly protracted”.
Rowan Gormley, Majestic chief executive, insisted that “our plan is working”:
We said that we would deliver sustainable growth, not by opening more stores, but by investing in better customer service and better customer retention. Both of these are working – sales are up over 10% and the projects driving that sales growth, like nationwide next day delivery, are on time and on budget. Now that we have built a solid platform for future growth, future cost growth will be much lower. We are reiterating our commitment to hitting our goal of delivering £500m sales by 2019, and we believe that will translate into healthy profit growth now that the step change in investment is complete.
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