Majestic Wine’s new chief executive promised he could “create significant value for its shareholders” yesterday but warned that it would cost at least £3m to turn the business around.
Rowan Gormley, who became chief executive when Majestic bought his Naked Wines business in April, said that while he had been in charge for only 10 weeks he had already identified a number of areas where the wine retailer could do better.
Mr Gormley said he would reveal his full plans at the half-year results in November but so far he plans to test cutting the minimum purchase from six bottles to one; try new store formats moving away from the warehouse look; move to hold on to staff longer, and make service more personal and recognise customer loyalty.
He is also looking to rebuild the supply chain, create a new IT system fit for a multi-channel retailer, and cut back on openings which do not produce acceptable returns.
Majestic’s headline annual profits fell 12 per cent to £20.9m – in line with revised forecasts after the profits warning which led to Steve Lewis’s departure in February.
Sales actually rose 2.3 per cent to £285m in the year to March and while the average spend per visit was flat at £129 the price of an average bottle crept up from £7.94 to £8. As warned, the dividend has been scrapped with no return to a full pay-out until 2018.
Mr Gormley said: “This is a great business which has lost momentum. I am sure that with investment and time we can restore investor value. We also have two parts of the business – Majestic commercial and Naked Wines – which are growing strongly.”
His initial research among Majestic retail customers or potential customers was that some were intimidated by the warehouse format; many did not want to have to buy half a case of wine; and the business needed to do more to reward customer loyalty.
He also said Majestic should concentrate on its “sweet spot” of £8 a bottle, where margins were better than cheaper or more expensive wines.
Majestic Wine shares fell 19p to 421p.Reuse content