Majestic Wine reports full-year profit but says trading has worsened since

MAJESTIC Wine has swung to a full-year profit, but warned trading was getting harder as retail woes show no sign of letting up.

The wine warehouse chain – which has 210 branches in the UK and two in France – recovered to an annual profit of £8.3 million for the 12 months to April 2, against losses of £1.5m the previous year.

It said, on an underlying basis, pre-tax profits rose 63% to £17.2m on revenues 4% higher at £477.7m.

But chief executive Rowan Gormley said trading had worsened since the year-end. He said: “We expect the UK market to remain tough, possibly even tougher than last year.”

The group still expects to hit City expectations for 2018-19 and see its retail arm continue to grow sales. It hopes to weather the challenging conditions with an ongoing cost-cutting drive, paying down debts and focusing on growth online, while expanding abroad.

Mr Gormley said: “If the UK is headed for a retail crisis, as commentators suggest, we are planning for a great crisis. We founded Naked Wines during the financial crisis of 2008 and proved that investing in acquiring customers and generating loyalty, will drive profitable growth even in a tough market.”

The group is investing in attracting new customers, which saw it warn in April over an earnings hit from the drive. It plans to invest an extra £9m to £12m in the 2019 financial year, meaning a £2m to £3m hit on adjusted underlying earnings compared with 2018.

Its annual results showed Majestic Wine warehouse revenues rose 0.6%, or 1.9% on a 52-week underlying basis but its profit margins were knocked by “competitive pricing”.

The group’s Naked Wines online delivered an 8.1% rise in sales, up 11.3% on an underlying basis.