Majestic Wine raises glass to revenue boost after Naked Wines buy, but braces for store revamps and takeover costs to hit profits
Majestic Wine, the favoured mass booze retailer of the middle classes, is expected to report a leap in sales tomorrow following its takeover of rival Naked Wines last year.
Revenues at the firm are forecast to have risen 41 per cent in the year ending March 2016, from £285.4m to £403.2m, according to analysts at Investec. However, profit before tax is forecast to come in at £14m, a drop of more than 30 per cent, while earnings per share are expected to reach 14.5p – a fall of almost 40 per cent.
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The profit slide is attributed to costs related to the takeover of Naked Wines in April last year in a £70m deal, while improvement projects at Majestic Wine's 200-plus stores also took a toll.
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Analysts described 2016 as "an encouraging first year under new management", after the boss of Naked Wines, Rowan Gormley, was installed as Majestic's chief executive soon after the acquisition. The company's former boss, Steve Lewis, stepped down following a poor performance over the 2014-15 Christmas.
The takeover of Naked Wines, which Gormley founded in 2008 after coming up with the idea of using crowdfunding to help forward-fund independent vineyards in return for exclusive wines at wholesale prices, has helped Majestic build on its online presence.
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Gormley told City PM he was looking to "unleash" the retailer's entrepreneurial spirit soon after he took the helm.
In July last year, Majestic rolled out a click and collect service in stores for Naked Wines, and in October the group abandoned its six-bottle minimum purchase and implemented a new pricing strategy aimed at "making the shopping experience simpler and easier for both new and existing customers".