Employee Engagement

Majestic Wine has increased underlying sales for the first time in four years after scrapping its minimum purchase and stocking more English wine, craft beers and spirits.

Retail sales at stores open a year or more rose 4.8% in the year to 28 March compared to a year earlier, as active customer numbers increased 12% to 775,000. Total sales increased 11% to £402.1m, including those from Naked Wines, which Majestic bought in April 2015.

Naked Wines is an online retailer that lets subscribers fund independent winemakers in exchange for purchases of exclusive wines at preferential prices. Its founder, Rowan Gormley, became Majestic’s chief executive when the sale occurred.

Gormley has pledged to revive Majestic, Britain’s biggest specialist wine retailer, after several years of disappointing results. He ditched a minimum six-bottle purchase left over from its days as a warehouse, simplified prices and updated the range of drinks.

Pre-tax profit fell 75% to £4.7m, with money being spent on Gormley’s revamp and increased borrowing costs linked to the purchase of Naked Wines. It also paid £7.3m in shares to Gormley and his team as part of the deal, which were counted as one-off profit deductions.

Majestic’s shares have risen 50% this year and were up 2.7% at 450p in late morning trading on Monday.

Gormley said examples of improvements to Majestic’s range included replacing some French regional wines with increasingly fashionable English wines. “There are a lot of interesting French regional wines but we had far too many. There is increasing demand for English wine and the quality of supply has improved to the point where there are lots of good products to put on the table,” he said.

“We have also gone much bigger on craft spirits and craft beer because they are categories that are growing and where people like to get advice, which is what Majestic does best.”

Naked Wines’ sales rose 27% to £104m and the business made its first profit – of £1m – since it was launched in 2008. It sells wines from 152 producers in 14 countries and has 300,500 customers.

Gormley said the results showed his plan was taking effect but that Majestic would continue to face fierce competition. Supermarkets have used wine offers to lure customers but Gormley said he would not get dragged into crude price cuts that were not viable in the long run.

He said: “Trading conditions have been tough for a while and we expect them to remain tough. There is no sales growth in the market so we can only get growth at the expense of others and they are tough, experienced competitors, so that’s hard.”

Gormley’s other changes include making life easier for employees in stores, increasing pay and giving branch managers bigger bonuses for doing well. Longer-term improvements in his three-year plan include revamping computer systems to provide staff with more information about customer preferences.

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