Majestic’s profits grew strongly thanks to an aggressive store-opening programme - the wine merchant opened eight new outlets over the period, and three more since the period-ended. But evidence is mounting that growth is slowing.
Strip-out the new stores impact and sales increased just 2.7 per cent over the period - compared with 5.3 per cent last financial year and 4.4 per cent in the first 10 weeks of this year. Worse still, management reported that like-for-like sales for the six weeks since the period ended were actually down 1.1 per cent. Chief executive Steve Lewis admits that business has been “more rocky than last year” and is now pinning his hopes on the crucial Christmas trading season, when Majestic typically makes a third of its annual sales.
The average bottle price, excluding bubbly, rose 6.9 per cent to £7.13 - implying that Majestic is extracting growth from price increases more than volume growth. Although, following the demise of rivals Oddbins and Threshers, it continues to take market share - with 3.9 per cent of industry sales this year compared with 3.5 per cent a year ago.
Liberum expects full-year adjusted pre-tax profits of £22.8m and EPS of 26.4p (2011: £20.3m/22.6p).
MAJESTIC WINE (MJW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 398p | MARKET VALUE: | £252m | |
| TOUCH: | 393-398p | 12-MONTH HIGH: | 510p | LOW: 360p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 106p | NET DEBT: | 1% | |
| Half-year to 26 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 118 | 7.35 | 8.30 | 3.30 |
| 2011 | 128 | 8.81 | 10.0 | 3.80 |
| % change | +8 | +20 | +20 | +15 |
Ex-div: 7 Dec Payment: 6 Jan | ||||
