A marketing disaster in the US plunged it into the red in FY2017, but it seems Majestic Wine (WINE) is feeling more confident about the future. This explains the decision to spend more money on growing its customer base, training its staff and improving compliance and finance structures to help it stay on the straight and narrow. In the 12 months to April 2018 the group spent more than £14m on acquiring new customers in the US via its Naked Wines business, and this year it plans to spend between £5m and £8m doing the same thing. That will be helped, of course, by the fact that cash flow is strong, and the group’s net debt position is much improved.
But chief executive Rowan Gormley admits the UK market is going to remain tough – “possibly even tougher” – this year. While FY2019 targets remain in sight for now, Mr Gormley concedes that trading since the start of the new financial year has been slower on home turf compared to the same time 12 months ago.
Analysts at Liberum expect pre-tax profits of £14.9m for the year ending March 2019, giving EPS of 16.3p, compared to £17.2m and 22.3p in FY2018.
| MAJESTIC WINE (WINE) | ||||
| ORD PRICE: | 458p | MARKET VALUE: | £ 330m | |
| TOUCH: | 457.5-458p | 12-MONTH HIGH / LOW: | 486p | 305p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 42 | |
| NET ASSET VALUE: | 169p* | NET DEBT | 7% | |
| Year to 2 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 278 | 23.8 | 27.0 | 16.0 |
| 2015 | 284 | 18.4 | 20.5 | 4.2 |
| 2016 | 402 | 4.7 | 3.5 | nil |
| 2017 | 465 | -1.5 | -4.1 | 5.1 |
| 2018 | 476 | 8.3 | 10.9 | 7.2 |
| % change | +2 | - | - | +41 |
| Ex-div: | 21 Jun | |||
| Payment: | 15 Aug | |||
| *Includes intangible assets of £48.1m or 67p a share | ||||
