Majestic Wine has swung to a half-year loss as the retailer ramps up investment in acquiring new customers.
The wines and spirits specialist fell into the red by £200,000 on a pre-tax basis, having made a £3.1m profit in the first half of last year.
Adjusted EBIT slumped 60% to £2.9m during the 26 weeks to October 1, while underlying profits fell at an almost identical rate – 59.5% – to £2.9m.
Back in April, Majestic Wine outlined its plan to ramp up investment into acquiring new customers, particularly within its Naked Wine business – founded by group chief executive Rowan Gormley.
It made a £7.9m investment into new customer acquisition at Naked during the first six months of the year, up 60.6% year-on-year.
Majestic booked a further £17.5m spend on Naked’s repeat customers, up 16.5% on last year.
The group’s revenues advanced 5.4% to £229.1m across the half, which it attributed directly to the investment plan.
Sales growth within Naked accelerated to 14% from 11.6% during the first half of 2017/18. Majestic revenues climbed 1.9% – the same rate of growth as it recorded this year last year.
Gormley said the figures demonstrated that the business was “doing well in a tough market”.
“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,” he added.
“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. As a result, we now have a business that is almost 45% online and over 20% international with both the option, and intention, to invest further in order to drive returns.”
Majestic said it remained “on track” to hit its £500m sales target in its current financial year, with longer-term expectations “unchanged despite short-term headwinds”.
However, it warned that full-year adjusted EBIT across its Majestic retail and commercial arms would be “flat at best” compared to 2017/18, having previously targeted growth.