Increased costs and reduced margins were to blame, according to company secretary Timothy Daunt.
In his director’s report, part of Oddbins’ 2006 accounts published this week at Companies House, Daunt said the loss was “driven by a fall in margin due to lower product prices” as the drinks retailer had abandoned individual price promotions in favour of lower year-round prices.
Costs associated with a higher average number of shops had also played a part, Daunt said.
Oddbins' loss – for the 12 months to Dec 31 2006 – is significantly more than the £3 million reported for 2005.
The Castel-owned business enjoyed sales of £121 million last year, only 0.4 per cent down on 2005.
Oddbins’ growing wholesale business had helped to offset tougher retail conditions, Daunt said, although the company had been forced to make some support staff redundant.
Since January 2007, Oddbins has disposed of a number of unprofitable stores and converted others to Castel's Nicolas fascia. There are now 173 branches of Oddbins and 82 Nicolas shops in the UK.