Majestic Wines' margins hit by rivals' aggressive Christmas promotions

07 January, 2015

Majestic Wine’s share price sank this morning after it revealed that margins took a hit as it invested 50 basis points of gross margin to remain competitive over Christmas.

The retailer reported a like-for-like sales growth of 1.1% during the 10 weeks to January 5, but had to invest in price in the face of aggressive promotional activity in the sector.

Majestic called it a “particularly challenging” festive period.

Shares were down by 14% in early deals, trading at 340p each, and Investec analyst Kate Calvert downgraded her estimate for the company’s 2015 profit before tax by 6% to £22 million.

She said: “Majestic’s Christmas performance has fallen short of our forecast with a far more promotional environment hitting margins.

“With yet another downgrade, concern over strategy and future growth potential is likely to overhang the shares until the actions from the expected strategic update in June start to come through.”

Overall sales – including new store openings – grew 3.7% in the 10 weeks to January 5. Majestic added that in the 40 weeks to January 5 like-for-like sales are now up 2% on the previous year.

Chief executive Steve Lewis said: “Majestic delivered like for like sales growth of 1.1% in a difficult Christmas trading period characterised by promotional activity and we are now focused on delivering our final quarter's trading. We anticipate this competitive pricing environment will continue throughout much of 2015.”




Bookmark this


Site Search

COMMENT

Donald Trump: the US has much to learn from history

The reasons Donald Trump should not be left in charge of a shopping trolley, let alone the keys to the White House, are plentiful and well-documented – from his use of the word “bigly” and lamentable business legacy to his dubious post-modern feminist principles, quite astonishing lack of political acumen and, most worrying of all, his bewildering hair. 

Click for more »
Upcoming events

Polls

Is blended Scotch overshadowed by single malt in retailers?

  • Yes
  • No
  • Don't know

Facebook

Twitter