A washout summer and the distraction of the Olympics weighed on sales at Majestic Wine, the retailer that targets middle-class Britons buying wine by the case.
Announcing half-year results, Steve Lewis, chief executive, said: “Majestic is very reliant on people planning for events, parties and outdoor events. It is the only place to go for that, and a lot of those events were washed out.”
The company had forecast a potential sales boost from the Olympics, but the games failed to deliver the expected uplift.
“The Olympics was a triumph for the UK, but a huge distraction for everyone else,” said Mr Lewis.
A combination of the two disappointments knocked 1.4 per cent off the group’s total sales, which came in at £126m for the six months to October 1.
The drop was exacerbated by Majestic’s shift into higher-margin in-store sales and away from wholesale. Sales in the wholesale arm more than halved to £3.2m.
But Majestic reduced the minimum retail order via its website from 12 bottles to six, which helped improve margins as customers opted for more expensive brands. Online sales continued to grow rapidly, rising 14 per cent year on year and now accounts for one in 10 purchases. Profit before tax increased 3.9 per cent to £9.2m.
Mr Lewis was bullish about the next six months. “I’m confident about Christmas. It will come very, very late though. We have three full trading weeks before Christmas. Everyone will work right up until the Friday and so that weekend will be hugely busy.”
The first six weeks of the second half saw strong trading, the group said, with like-for-like sales at Majestic’s stores up 1.2 per cent.
Mr Lewis said the group would press on with expansion, after having opened nine new stores over the period, and will have 192 UK stores across the UK by Christmas.
This figure could increase to 330 in the next 10 years, according to Mr Lewis. “We know we have the potential to increase,” he said. “We like to open [a new shop] roughly once a fortnight outside of December, January and February.”
Diluted earnings per share rose 6.1 per cent to 10.4p and the group increased its dividend 5.3 per cent to 4p.
Shares in Majestic Wine have rallied by more than a quarter over the past 12 months, as the company appears to have coped with increasing supermarket competition better than its rivals.
Waverley TBS, the drinks wholesaler, fell into administration earlier this year, while Oddbins went into administration in 2011 before being relaunched.
Majestic’s shares closed up 2.4 per cent at 476p.
Get alerts on Retail sector when a new story is published