Majestic shares dumped after profit warning
INVESTORS uncorked their shares in Majestic Wine yesterday after the specialist wine retailer warned that a dry spell in February sales had flattened full-year profits.
Chief executive Steve Lewis said that trading conditions since the more buoyant Christmas period have been “challenging” and that with just two weeks to go until its year-end, it now expects like-for-like sales to be flat for the year as a whole.
As a result the company warned that it now expects to post an annual pre-tax profit of about £23.5m – roughly flat year-on-year, sending shares down by 19 per cent yesterday.
Lewis said that to support its expansion, the group will have to invest in new offices, staff and a bigger distribution centre, also lowering profit growth in 2015.
“I am confident that the investments we are making over the course of the next twelve months will drive future shareholder value,” he said.
Investec analyst Kate Calvert had forecast like-for-like sales growth of 1.7 per cent.
“This is a disappointing set back from what is a well-run, highly cash generative company,” she said.
However she remained upbeat on the group’s outlook and its expansion plans for online and in its stores.
The latest market data from Nielsen indicated Majestic has held on to its market share of 4.1 per cent, despite the recent sharp fall in sales, as the retailer continued to benefit from consumers saving money by dining in but splashing out on affordable luxuries like wine.