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).
MAJESTIC WINE (MJW) | ||||
---|---|---|---|---|
ORD PRICE: | 466p | MARKET VALUE: | £302m | |
TOUCH: | 464-470 | 12-MONTH HIGH: | 489p | LOW: 312p |
DIVIDEND YIELD: | 3.4% | PE RATIO: | 17 | |
NET ASSET VALUE: | 121p | NET DEBT: | 4% |
Half-year to 1 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2011 | 128 | 8.81 | 10.0 | 3.8 |
2012 | 126 | 9.16 | 10.5 | 4.0 |
% change | -1 | +4 | +5 | +5 |
Ex-div: 5 Dec Payment: 4 Jan |