Seeing red: Majestic to stockpile for no-deal Brexit
Majestic plans to import an extra £8m of wine to prepare for disruption to supplies caused by Brexit. The company said it would build up between £5m and £8m of additional wine as the 29 March withdrawal date looms.
The British wine seller becomes the latest company to outline its stockpiling plans as preparations ramp up for a disorderly exit from the EU which could include long delays at ports and disruption to supplies of a range of goods. A Brexit deal is yet to be agreed with just four months to go and deep divisions remain within Theresa May’s government as she prepares to head to Brussels for a crucial summit on Sunday.
FTSE 100-listed Compass, the world’s largest caterer, said on Wednesday that it was ready to start stockpiling ingredients if necessary. Bisto and Mr Kipling maker Premier Foods announced last week that it too plans to build up supplies. Besides Brexit stockpiling, Majestic revealed that it had fallen into the red with a £200,000 pre-tax loss for the half year to 1 October, down from a profit of £3.1m a year earlier.
The news sent Majestic’s shares plunging 15 per cent yesterday morning. Chief executive Rowan Gormley said his company was “doing well in a tough market”. He added: “We set out a plan at our capital markets day in April 2018 and we are delivering against it. That plan was to accelerate growth by investing in new customers and, so far, the plan is on track.”
Despite the loss, Majestic predicts it will still hit its £500m sales target for this financial year. Its online Naked Wines business recorded a 60 per cent rise in subscription sales to £7.9m, though this still represents a small proportion of the group’s overall revenues. The company warned that further investment in expanding Naked will hit profits while tough trading conditions will continue to drag on both its retail and commercial businesses.
“We were planning for tough times and we’re investing through tough times because we know that’s the route to a more profitable future,” the firm said in a statement. “As a result, we now have a business that is almost 45 per cent online and over 20 per cent international with both the option, and intention, to invest further in order to drive returns.”