Majestic’s boss has warned of price rises for UK wine drinkers, saying that increases will be the case at all UK retailers.
Rowan Gormley made the comments on the Today programme on Radio 4, adding that Brexit meant that wine prices would rise “until we grow more grapes in the UK”.
He added: “In the long run, all imported products are going to have to reflect the fact the exchange rate has moved. It’s simply a matter of time until all prices adjust.”
Gormley added that its prices should stay level until Christmas at least and that its hedging meant that it would “hold prices for as long as [it] can”.
Chief financial officer James Crawford told Retail Week that its cost base had not yet spiralled.
He said: “Like any retailer, we hedge so we haven’t dropped off a precipice. And because of the amount of duty we pay, a bigger chunk of costs is in pounds than you might expect. Our situation is not as severe as many clothing retailers.”
Crawford added that, although Majestic would participate in Black Friday, he believed that the phenomenon was decelerating.
He said: “Consumers are getting a bit savvy to it, asking if it is a gimmick or if it’s real. I think you will see another slow down.”
Majestic revealed increased sales and like-for-likes at its interims this morning, but reported a pre-tax loss of £4.4m.
The loss was not unexpected as Majestic had previously issued a profits warning due to trouble in its US Naked Wines division and a “challenging” commercial business.
Gormley insisted in the update this morning that Majestic’s plan was “working” and that the loss “would translate into healthy profit growth now that the step-change in investment is complete.”
Verdict analyst Sarah Johns sounded a note of caution, saying that while there were signs that Majestic’s investment in customer service and retention would pay off, it was “too early to say” whether losses could be reversed.
She conceded however that there was evidence that Majestic’s “transformational plan is a success”.