Christmas will be key for Majestic

Majestic Wine was never going to have a vintage first half after the grim summer weather. Indeed, like-for-like retail sales growth of 0.6 per cent, while not disastrous, is seen as disappointing by many analysts. Moreover, sales weakness was compounded by a decision to pull out of the wholesale business - revenues from these low-margin activities fell from £10.4m to just £3.2m in the period. This move should boost group profitability but, initially, broker Investec estimates the drag on profits will be about £1m a year.

However, there were reasons to be positive ahead of the key Christmas trading period. Following the opening of nine new stores, overall retail sales grew 4.7 per cent to £109m and active customer numbers rose 11.6 per cent to 594,000. What's more, average spend per transaction edged up by a pound to £126. The group also delivered online sales growth of 14 per cent, which takes such sales to almost a tenth of UK retail. The posh-wine business, Lay & Wheeler, made good progress as did Majestic's two Calais shops. And the second half has started better with like-for-like sales 1.2 per cent ahead in the first six weeks, albeit against a weak comparative period last year.

Investec is standing by its full-year pre-tax profit forecast of £24.1m and EPS of 27.7p (from £23.2m and 26.1p in 2012).

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