Majestic sales lose their fizz

14 November, 2008

A dip in Champagne sales contributes to wine merchant's financial struggle

Falling sales of Champagne and reduced on-trade orders were partly to blame for an uncharacteristic decline in Majestic's six-month profits.

The retailer reported "challenging trading conditions arising from the increasingly uncertain economic climate", as it unveiled profits were down 25.5% on the same period a year ago.

Chairman Simon Burke said: "Sales of Champagne declined 6.4% on last year.

Sales to private customers were up 2.9% in the period. However we have seen a decline in sales to business customers through the store network of 1.6%.

"These

are predominantly small owner-operated restaurants, gastro pubs and hotels

and many have seen

turnover slow in the current economic conditions."

Profits dropped 25.5% to £5.6 million

to Sept 29. Although sales were up 3.4% to £94.1 million, and UK sales rose 4.7%, like-for-like revenue was down by 2.1%.

Like-for-like sales in the first five weeks of the new financial year, to Nov 3, were down 4.7% on a year ago.

Chief executive Steve Lewis said: "I am pleased

we have maintained our UK wine market share in

challenging conditions.

"I am confident that Majestic, with its robust business model and highly differentiated customer proposition, can maintain its market position ."

The average Majestic bottle price

increased to £6.19, from £5.85 last year, and sales of wine priced over £20 were ahead by more than 10%.

The chain aims to have dedicated fine wine areas in 53 stores by Christmas. Majestic's web sales increased by 11.5% , but the company's French stores found the going harder.

"Like -for -like sales in

France declined 24.6% on a same currency basis," said Burke. "Profit before interest and tax for the period declined 53.7% to £414,000. From the beginning of autumn 2007 we have seen a marked decrease in sales due to the appreciation of the euro against sterling coupled with the increase in the cost of fuel. We have increased our marketing activity and have ensured we have

promotional offers for Christmas."

257

Stores trial new minimum purchase

Majestic's Newcastle and Darlington branches are offering a minimum purchase of six bottles instead of

12 for a trial period.

Marketing director David Sinfield said the experiment, which began in July, was in response to suggestions made by new customers and its progress would be reviewed in the

new

year. "It's something that comes up from time to time and we want to see what the reaction is," he said.




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