Majestic Wine's (MJW) new chief executive is out to make his mark. Rowan Gormley has a three-year plan to get the booze retailer back on track, targeting sales of more than £500m by 2019. The number of stores, currently at 211, will be kept to a maximum of 230 instead of the 330 targeted by his predecessor. Supply chain and IT systems will be improved, and a minimum 25 per cent return on capital employed will be targeted.
Six months into the job, Mr Gormley says Majestic's core business is "solid", although the latest set of reported figures do take some decoding. The 50 per cent plunge in reported profit was the result of higher costs associated with the Naked Wines acquisition, which also accounted for the surge in the group's net debt at the period-end. Strip out those costs, however, and adjusted pre-tax profit only dipped 1 per cent to £8.4m. Underlying revenue - which exclude any contribution from Naked Wines - still managed to grow 6 per cent, or 2.3 per cent on a retail like-for-like basis.
As expected, the group failed to announce a dividend. Payments are not expected to be reinstated until 2018. House broker Investec Securities expects pre-tax profit of £14m for the year ended March 2016, giving EPS of 14.5p, compared with £20.6m and 23.7p in FY2015.
| MAJESTIC WINE (MJW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 298p | MARKET VALUE: | £211m | |
| TOUCH: | 297-298p | 12-MONTH HIGH: | 480p | LOW: 273p |
| DIVIDEND YIELD: | nil | PE RATIO: | 22 | |
| NET ASSET VALUE: | 148p* | NET DEBT: | 24% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 134 | 8.5 | 9.8 | 4.2 |
| 2015 | 182 | 4.3 | 2.7 | 0.0 |
| % change | +36 | -50 | -72 | - |
*Includes intangible assets of £60.7m, or 86p a share | ||||
