Wine specialist Majestic Wine is “optimistic” about Christmas trading after reporting a better than expected UK interim like-for-like sales rise.
Chief executive Steve Lewis said: “It’s very reassuring that we’ve recorded a 5.4% uplift in a period of intense competition from the supermarkets so, while the economy remains uncertain, we are confident we will perform well at Christmas.”
Majestic reported pre-tax profit jumped 9% to £6.1m in the 26 weeks to September 28. Total sales rose £12.6m to £106.7m, including a £6m contribution from Lay & Wheeler, the fine wine specialist it acquired in March.
Lewis said that while the big four supermarkets had sustained a three-for-£10 offer on bottles of wine for the past year, Majestic continues to gain because of its quality offer.
“We recruit for our stores at graduate level and invest in staff training to a very high quality,” said Lewis. “Plus we have a superb range of fine wines, which gives us a compelling offer in the face of stiff competition.”
Majestic said initial findings from its minimum order switch from 12 to six bottles in September was “encouraging”. Lewis said: “We researched our active database and found that 49% of customers only shopped with Majestic once a year. So we asked them what we could change to make them shop more and they said they’d like the option to buy six bottles.”
Oriel Securities analyst Ben Hunt said Majestic is “successfully defending market share from the onslaught of supermarkets with the new six-bottle minimum purchase”. He pointed out that after the introduction of the six-bottle minimum, average spend is down just 7% but transactions are up 16%.
Majestic said online sales rose 24.6% on last year – they now represent 9.2% of UK retail sales. The retailer has redesigned its blog to allow more customer interaction and shoppers can write their own reviews to be published online.
Lewis said if Threshers owner First Quench – which is in administration – were to cease trading altogether then it would “mean there is spare capacity in the market” and that for suppliers, there will be fewer places to sell the more upmarket wines.
Noble analyst Sanjay Vidyarthi said Majestic has shown “considerable scope for increasing the frequency of visits through more marketing – for example wine tasting classes – and initiatives such as the six-bottle minimum”.