Last year’s profit warning is “firmly in the rear-view mirror” according to Majestic Wine’s (WINE) chief financial officer, James Crawford. A direct mail campaign aimed at generating new customers in the US for the Naked Wines business was a miserable failure, resulting in a £1.5m reported pre-tax loss for the 2017 financial year.
Six months on, the retail business is “stable” says broker Peel Hunt, especially as improvements to customer service and the product line, including more exclusive offers, helped to galvanise sales. It must be said, however, that a 6 per cent price rise – to mitigate higher currency-driven input costs – largely explains the reported revenue growth.
Now, the group wants to kick-start investment in the US again, albeit with a sharper focus on digital marketing. In Mr Crawford’s view, future growth opportunities lie mostly online and, more specifically, in Naked Wines. That business is now profitable across all three of its geographical markets, with sales up 10 per cent in the US alone. New customer sales are still down, but growth is coming from what the company refers to as “mature angels” – existing customers to you and me.
Analysts at Peel Hunt are forecasting an upgraded EPS of 17.9p for the year ending March 2018, up from 10p in FY2017.
| MAJESTIC WINE (WINE) | ||||
| ORD PRICE: | 411p | MARKET VALUE: | £ 293m | |
| TOUCH: | 411-412p | 12-MONTH HIGH: | 419p | LOW: 280p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 93 | |
| NET ASSET VALUE: | 162p* | NET DEBT: | 22% | |
| Half-year to 2 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 206 | -4.4 | -6.1 | 1.5 |
| 2017 | 217 | 3.1 | 2.4 | 2.0 |
| % change | +6 | - | - | +33 |
| Ex-div: | 30 Nov | |||
| Payment: | 22 Dec | |||
| *Includes intangible assets of £49.6m, or 69p a share | ||||
