Majestic profits lose their fizz as customers cut back on bubbly

Pre-tax profits at Majestic Wine tumbled by more than a quarter in its first half, as corporate customers cut back on entertaining and quaffing champagne and left the wine warehouse chain with a hangover.

The dire figures from the 147-store chain came as the British Retail Consortium said that retailers endured their worst sales for three and a half years in October, putting down an ominous marker for what is expected to be a dreadful Christmas trading period.

Majestic Wine said that its pre-tax profits plummeted by 25.5 per cent to £5.6m, the retailer's worst performance since 2005, for the 26 weeks ended 29 September.

The retailer is suffering from private, corporate and on-trade customers, such as gastro pubs and restaurants, tightening their belts during the credit crunch, as well as cut-throat competition from the big supermarkets.

While Majestic's underlying sales fell by 2.1 per cent over the six-month period, they slumped further by 4.7 per cent for the five weeks from 30 September to 3 November.

In the UK, its sales of champagne fell by 6.4 per cent over the 26-week period. Steve Lewis, Majestic Wine's chief executive, said it was "particularly noticeable" that business customers had reduced their purchases of champagne. Mr Lewis said: "Business customers have not been doing as much entertaining and this is hardly surprising because they have not had much to celebrate recently." He added that a growing number of customers were opting for "good quality sparkling wine" rather than "entry-level champagne".

Majestic Wine has increased the proportion of wine ranges it sells from countries such as New Zealand, Chile and Argentina, at the expense of those from the Loire and Burgundy regions of France, as customers look for value for money.

The average spend per transaction at Majestic, which only sells wine by the case, rose to £135 from £128 over the six-month period. The average bottle of still wine purchased at Majestic climbed by 5.8 per cent to £6.19.

Total sales at Majestic Wine, which has a small operation in France and a fast-growing online business, grew by 3.4 per cent to £94.1m over the six months.

While Majestic's sales to customers rose by 2.9 per cent over the period, its sales to business customers, who are primarily small, owner-operated restaurant, gastro pubs and hotel businesses, fell by 1.6 per cent.

Separately, the British Retail Consortium has revealed that October was the worst month for retailers since April 2005, which itself was skewed by the timing of Easter. Total retail sales fell by 0.1 per cent in October, which is "extremely rare", compared with the same month a year ago, according to KPMG. Underlying retail sales fell by 2.2 per cent, as all sectors with the exception of food and drink struggled.

Tim Clifford, a retail partner at KPMG, said: "In non-food, it is going to be some of the toughest trading that has been seen in the last 20 years."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Danny Cipriani of England breaks clear to score his second try
Life and Style
New research says leaving your desk can help you to avoid serious illness
Arts and Entertainment
tvSPOILER ALERT: Like a mash-up of 28 Days Later, Braveheart, The Killing and Lord of the Rings, this GoT episode was a belter
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral