Proactive Investors - Run By Investors For Investors

Majestic Wine shares flow higher as turnaround plan bites

The firm has been under pressure to kickstart growth and in September issued a profit warning
Majestic Wine shares flow higher as turnaround plan bites
The firm reinstated an interim dividend of 1.5p a share, underlining future confidence

Shares in wine merchant Majestic plc (LON:MJW) flowed a little higher as it told investors its turnaround plan was working and it unveiled a 13% increase in sales in the first half.

The firm has been under pressure to kickstart growth and in September issued a profit warning, forecasting pre-tax earnings before interest for the full year to April 2017 would be lower than market expectations.

In the latest six months to September 26, revenue was £205mln (2015: £181.6mln). The loss for the period was £4.4mln, compared to a profit of £4.3mln in the same period last year.

The loss recognised £4.5mln of adjusted items, largely relating to the group's acquisition of online retailer Naked Wines in 2015.

The firm reinstated an interim dividend of 1.5p a share, underlining future confidence.

Chief executive Rowan Gormley said: "Now that we have built a solid platform for future growth, future cost growth will be much lower.

"We are reiterating our commitment to hitting our goal of delivering £500m sales by 2019, and we believe that will translate into healthy profit growth now that the step change in investment is complete."

The period saw a 26.7% increase in sales at Naked and a 5.7% rise like-for-like in the retail division. Majestic commercial was up 1.2%

Its Lay & Wheeler fine wine group was firmly back in growth, with a 27.8% increase in sales, due largely to the huge positive impact of a new management team.

House broker Liberum rates shares a 'buy' and targets 380p.

"The dynamic model being created is a far cry from the old Majestic," it says.

The transition towards a 'return on investment' focus via opex driven growth was always going to create a short, albeit sharp decline in these first half results, it notes.

"There are signs of positive momentum which, should they continue, drive outperformance."

Shares added 1.08% to 305p.

View full WINE profile View Profile

Majestic Wine PLC Timeline

Newswire
January 09 2018
Article
January 10 2017

Related Articles

Polish pizza
March 28 2019
In 2018, DP Poland’s system sales rose by 24% to 72mln Polish zloty (PLN) from PLN 58mln in 2017, despite a tough second half to the year as aggregators took a bite from its business
true leaf pet product
March 30 2019
The company says both the cannabis and pet industries represent high-growth industries
US bills and cannabis plant
February 28 2019
CEO Mike Withrow has built AREV into what is now a cannabis and hops company that owns a series of promising businesses

© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use