Majestic: 'We can double store numbers'

13 June, 2011

Majestic has said it is in a position to double the size of its estate from its current 165 stores to 330.

Chief executive Steve Lewis told OLN: “We’ve completed a large piece of research over the last six months which shows we can extend to 330 shops. We’re currently at 165 – we opened 12 in the past year, which is double the previous year. We’re expecting to open 12 more this year but you won’t suddenly see us opening 30 a year as we can’t find that many.”

He said he wasn’t looking at any Oddbins sites.

“We don’t want to open on the high street, we’re an edge of town retailer and need parking and much bigger shops – our average is 3,500 square feet as we hold 12 weeks worth of stock,” said Lewis.

He said fine wine sales – which Majestic defines as £20 and above – had increased by 23% in the past year. Fixtures for fine wine are installed in 107 stores and will be rolled out across the portfolio.

In its results, announced today (June 13), the wine merchant saw annual pre-tax profit rise by 26% to £20.3 million in the year to March 28.

Average spend per transaction has declined 2.5% at £126 and the average bottle of still wine purchased at Majestic is now £6.94.

Lewis said: “We’re extremely pleased, moving to six bottles [from a minimum purchase of 12] has meant we’ve acquired new customers. There’s been a surge of 511,000 active customers, which is up 8% and now we have a much wider demographic. Younger people are now coming in too.”

The chain reduced its minimum purchase in September 2009 to make Majestic more accessible.

Lewis added: “Our major competitors are supermarkets, which have 80% market share. Our share has increased from 3.4% to 3.6% in the last year. It’s great to grow it against formidable competition – the supermarkets are great at what they do.”

Wine represents more than 85% of sales.

Lewis said: “We have seen particularly good growth in sales of wine from New Zealand and Argentina. In both these categories our share of the UK off-trade market is now more than 11%. French wine continues to be our largest category representing 34.4% of our sales of still wine.

“We are pleased that French wine sales have grown 10.1% over the past year led by wines from Bordeaux, Burgundy and the Rhône but also from the innovative Languedoc Roussillon region. Sales of sparkling wine are also showing a good increase, particularly Prosecco and wines from New Zealand.”

Total sales were up 10.3%, with like-for-ike sales in UK stores ahead by 5.3%.

Online grew by 9.6% and corporate business by 17.2%.

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