News Column

Majestic Wine's profits to stay flat until 2016

June 17, 2014

OLIVER SMITH



BRITISH booze retailer Majestic Wine disappointed investors yesterday after it reported flat profits of 23.8m for the year ended 31 March, compared to 23.7m the previous year, amid a market that its chairman said had been challenging for the business.


Majestic's board also warned that the company does not expect to see further substantial profit growth until 2016.


"The retail environment in which we operate has been challenging and we saw a marginal decline in UK like for like sales of 0.1 per cent," said chairman Phil Wrigley.


Total revenues climbed 1.4 per cent to 278m, with Majestic's market share rising by 0.1 per cent to 4.2 per cent.


Sales of Rose from Provence rocketed by 84 per cent, while Malbec from Argentina, Chile and France rose were up by 50 per cent.


"Majestic made good operational progress in the last year and despite the difficult trading environment delivered a solid performance," said chief executive Steve Lewis.


"2015 will be a year of increased investment for Majestic to ensure that we have the right infrastructure to maximise on our long term opportunities for future growth," he added.


Majestic Wine's shares have taken a beating in recent months, falling 19 per cent so far this year after issuing a profits warning in March.


Yesterday Majestic's London-listed shares dropped a further 3.9 per cent.


ANALYST VIEWS By Oliver Smith IS IT TIME TO TOAST MAJESTIC WINE AFTER ITS FULL YEAR RESULTS? KATE CALVERT INVESTEC Full-year 2014 profit came in 100,000 better than we expected, after a warning in March following weak January and February sales. We believe the longer term growth prospects remain intact with the current valuation supported by an attractive dividend and strong cashflow.


NEIL SAUNDERS CONLUMINO The plans to invest in technology and logistics should help ease this number up over the next few years, but given the competition in the online market Majestic will need to be nimble to take advantage. Overall, we remain confident that Majestic can continue to hold its own in a competitive market.


SANJAY VIDYARTHI LIBERUM Full-year 2014 results were in line with lowered guidance issued on March 20.


There is a strong underlying business here that is fixable. But at this valuation, we need to see signs of meaningful recovery before turning more positive.


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Source: City A.M. (UK)


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