Majestic Wine suffers £1.5million loss due to overhaul
Majestic Wine has reported a £1.5million loss this year as it continues with a bold overhaul.
The figure for the year to April 3 was down £6.2million from last year's £4.7million profit.
Underlying profits tumbled 29 per cent to £12.9million on surging costs from the overhaul which has sought to 'innovate and rationalise' product range, improve the in-store experience for customers and introduce a 'new and fair' remuneration scheme for staff.
Majestic wine has reported a £1.5million loss this year as it continues with a bold overhaul.
Investors were left with a bitter aftertaste as shares fell two per cent to 375p in this morning's trading.
But the group said it was past the financial tipping point as underlying earnings shot up 51 per cent in the second half as its turnaround started to bear fruit, with underlying sales growth of 12.1 per cent in the final six months.
Majestic Wine warehouse chain saw like-for-like sales lift 5.7 per cent over the full year as it notched up eight consecutive quarters of rising sales.
Rowan Gormley, group chief executive of Majestic, said: 'We are past the tipping point, both financially and operationally.'
He added the group is on track to make £500 million in sales by 2019.
'We remain confident about the medium-term outlook, despite tough economic conditions, as transformation benefits are coming through and our costs are naturally coming down as a result of us reaching the next stage of the transformation plan,' he said.
The company also announced that chairman Phil Wrigley would retire at the annual general meeting in August. He will be replaced by non-executive director Greg Hodder.
Transformation: As well as removing its six bottle minimum policy, the group said it had been focused on 'getting the basics right'.
Majestic said its online brand Naked Wines also saw strong sales growth, up 26.3 per cent to £142.2 million.
After a very costly email marketing campaign, Naked Wines performed well overseas, with US sales jumping 28 per cent higher, while the group said its fine wines business Lay & Wheeler saw sales soar 36.2 per cent after 'years of languishing in the doldrums'.
Majestic Wine is halfway through a three-year turnaround plan aimed at expanding and retaining its customer base, slowing down branch network expansion, and acquiring new customers for Naked Wines.
In 2015 it abandoned its six-bottle minimum policy, a remnant of its warehouse days.
The group has 210 Majestic Wine warehouses in the UK and two in France. It has been growing its international customer base and said overseas sales grew by 52.7 per cent over the year to £88 million.