Majestic Wines reports rising Christmas sales but warns of 'very tough' trading conditions ahead

British wine sellers are being hit hard by the pound’s devaluation in the wake of the Brexit vote

The company said it had increased its margins and remains on track to hit its goal of £500m in annual sales by next year (Getty/iStock)

Majestic Wine increased sales by 4.1 per cent year-on-year in the Christmas period and said it was on track to meet its estimates for the full year despite “very tough” trading conditions ahead.

The UK wine retailer has been struggling in the face of increasing competition from discount supermarkets such as Aldi and Lidl, as well as the growth in online wine sales. Majestic said it generates around 30 per cent of its annual sales during the 10-week Christmas trading period.

Sales at its commercial division, which supplies pubs and restaurants, fell 4.6 per cent during that period to 1 January compared to the same period in the previous year last year. But its Naked Wines business, which was purchased in 2015, saw particularly strong growth, with sales rising 13 per cent over the trading period. Naked’s revenues in Australia surged 33 per cent.

Chief executive Rowan Gormley on Tuesday said that the company had increased its margins and remains on track to hit its goal of £500m in annual sales by next year. He also said the group would accelerate investment, acquiring new customers and a greater range of wine.

However, he did sound a note of caution. “I’m not saying we can walk on water – we face very uncertain economic times” he told investors. “We will be buffeted along with everyone else.”

British wine sellers were hit hard by the pound’s fall in the wake of the Brexit vote, which has already made imports more expensive, with further increases still to filter through to shop prices. The UK imports 99 per cent of wine sold in this country, according to the Wine and Spirits Trade Association.

Sellers face additional potential difficulties from tariff and non-tariff barriers when the UK leaves the EU, which accounts for more than half of those imports.

Majestic has 210 wine warehouses across the UK as well as two branches in France, while Naked Wines operates across the US, Britain and Australia.