Majestic Wine toasts 20 per cent rise in profits as buyers return
Tuesday 16 November 2010
Majestic Wine raised a glass to a 20 per cent rise in half-year profits yesterday, saying its decision last year to reduce the minimum purchase in its stores to six bottles had kept sales fizzing.
The wine warehouse's increase in earnings, which came in at £7.3m, was also driven by growing sales to businesses, a strong performance from its operation in France and surging demand for sparkling wines, fine wines and New Zealand brands.
Steve Lewis, the chief executive of Majestic, said the decision to halve its minimum purchase from 12 bottles to six in September 2009 was still attracting new customers and drawing existing ones into its shops more often.
The change was behind a 19 per cent rise in the number of transactions to 869,000 at stores open for at least one year. Mr Lewis said. The average spend per transaction fell by only 7 per cent to £122 in the 26 weeks to 27 September. Majestic reported a 7.6 per cent jump in like-for-like sales and, despite it now overlapping the anniversary of the shift in minimum purchase, the growth rate has fallen only marginally since the end of the half year.
Majestic, which has 160 branches in the UK and three in northern France, also celebrated a 5 per cent growth in champagne sales, with its Jacquart Brut at £15 a bottle the top seller. Mr Lewis said: "The British love affair with champagne keeps growing."
Majestic's total sales, including those at two new stores, grew by 10.2 per cent to £117.6m. It said sales to business customers such as gastropubs and restaurants were growing again after declining for two years.
However, Mr Lewis said: "There is no great evidence of corporate entertainment coming back."
Majestic raised its interim dividend by 17.9 per cent to 3.3p a share.
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