Majestic Wine's profits down 50%
Majestic Wine has reported that its pre-tax profit fell by 50% to £4.3 million in the six months to 28 September. The retailer attributed the drop to non-cash charges relating to its acquisition of Naked Wines, interest costs and exceptional items.
Meanwhile, group sales rose by 36% to £181.6 million and EBIT increased by 12%.
Majestic Wine has also announced that it has embarked on a new three-year strategy aimed at achieving sustainable, volume led earnings growth and improved return on capital. This will include a change of emphasis from opening new stores to new customer recruitment to drive higher returns from the current level of investment spend.
As a result, the total UK store target has been reduced from 330 to 230. The current number of stores stands at 211.
Rowan Gormley, Majestic's chief executive, said: "Six months in to my new job it is clear to me that we have a solid core business at Majestic, and two great growth engines in Naked and our Commercial business. We have a clear plan, which will require investment and take 3 years to complete, but will also deliver a better business that can create sustained growth in shareholder value.
“Fortunately, the Board acted decisively and quickly when it became clear that a change of direction was required, so our core competitive strengths are intact and provide a sound foundation to work from.
“As a result, profit for the current year is expected to be impacted by the increased investment derived from our successful test period after which we expect to see sustainable growth as the anticipated returns from our initiatives are realised."
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