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BUSINESS STOCKMARKET: Majestic toast of stockmarket again
Dealers toasted Majestic Wine with a glass of Champagne as it posted profits bubbling up by 17% in the first half of this year. Tim How, chief executive, points out, “That is quite an encouraging uplift, as the market isn’t moving forwards anything like that.â€
Pre tax profits soared to £6.46m in the six months to 26 September 2006 from £5.52m the year before. Sales frothed ahead to £88.3m against £80.8m the year before – up 9% overall and by 6.2% on a same store basis.
Majestic has 133 wine warehouses around the UK, and three in France. Online sales are also rising: orders lodged with Majestic’s website are up 43% against last year and now account for 6.4% of UK retail sales.
Majestic confirms that people are spending more on their wine despite the spending slowdown on the high street. The retailer is finding the average amount of cash spent per basket has risen to £121 in the first half, against £115 a year ago. The average price of a bottle of still wine at Majestic is now £5.66 against £5.54 last year.
Special display areas for fine wine costing over £20 per bottle are now installed in 20 stores. Sales of fine wine have soared by 33% in the first half and now account for 3% of total sales. Majestic believes that this will increase to 5% over the next two years.
Among the bubbly wines, Champagne is selling well. Rosé wines are also contributing to the bottom line. Majestic is returning £20m of spare cash to shareholders via a share buy back.
© db January 2007