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
News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
politicsIs David Cameron trying to prove he's down with the kids?
News
Businessman at desk circa 1950s
news
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea