Majestic Performance

Despite growing concerns over a slowdown in consumer spending, Majestic showed there’s still money to be made in selling wine, as it announced a twelfth consecutive year of record profits.

March 2005, rose from £10.7m to £12.9m and sales increased from £148.3m to £162.5m, growth of 9.6%. These impressive results were helped no doubt by the opening of seven new outlets over the year.

Chief executive, Tim How, believes the retail wine trade continues to have an underlying momentum of its own: “We operate in an expanding market where consumers continue to show a strong interest in a greater choice of better quality wines. We believe that the prospects for the future growth of Majestic are very good.”

The retailer has seen “good growth” in the number of customers on its database who have made purchases – up 8.9% to 354,000 – and has managed the Holy Grail of wine retailing by increasing the average spend on a bottle of wine to well over the magic £5 mark – up to £5.51 from £5.40. The average spend per transaction has increased from £107 to £113.

The FT comments, “Majestic Wine illustrates the benefits of sticking to a rigid formula that appears unimaginative. The company is clearly taking market share, continuing to add new customers at the same time as selling more to its ever growing base of existing customers.”