Majestic Wine chief executive Steve Lewis will press ahead with expanding to 250 branches from 150 over the next five to 10 years, despite a profits plunge.
Faltering corporate custom and a 20 per cent sales fall in Majestic’s northern France stores - two in Calais and one in Cherbourg - were blamed for a 56 per cent profit slump to £7.4m, on sales up 2.4 per cent to £201.8m in the year to March 30.
Lewis said: “From the middle of September we saw a really large decline in sales to companies, probably because they hadn’t got much to celebrate. And we are assuming that these sales probably won’t come back.”
He added that while sales to businesses, particularly of champagne, had collapsed, “better” sparkling wines were “holding good” as high street shoppers continued to frequent the stores.
The internet has also provided Majestic Wine with a source of succour. Online sales jumped 16 per cent against the previous year and now account for 9.1 per cent of the total.
Lewis pointed out that the retailer’s internet arm imposed no extra costs as orders are fulfilled in-store and deliveries made using a fleet of vans that were already in use.
He highlighted the free in-store “customer education programme”, dubbed “Wine Uncorked”, which he said is very popular with shoppers. A similar programme for Majestic’s catering customers, “Confidence in Wine”, has also been launched.
In spite of the problems in France Altium analyst David Stoddart rated Majestic a hold, saying it has “plenty of scope for further UK expansion and a lowly geared balance sheet”.
Evolution analyst James Wheatcroft downgraded Majestic from buy to add. He noted that takeover speculation “will persist after German lookalike Hawseko AG acquired a 3.4 per cent stake in January 2009”.
Lewis said that sales for the present year were likely to be level with last year.