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Majestic Wine's sales and profits corked

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No one likes flat booze, but wine seller Majestic Wine (LON:MJW) is suffering from flat profits.

Investors dumped the shares early doors, with the company losing almost a fifth of its stock market value after it revealed that profit before tax in the year to the end of March 2014 will be more or less unchanged from the previous year.

It seems that while customers were bending the arm in sufficient quantities over Christmas, 2014 has seen a number of customers extend their New Year’s resolution to lay off the plonk in January into February and March as well. With just two weeks of the financial year left, Majestic expects full-year sales will be flat year-on-year.

The company noted that according to the latest data published by market research agency Nielsen, Majestic has maintained its market share at 4.1%, so the profits warning does not bode well for other wine retailers.

A slow-down in sales growth has not discouraged the group from planning for future growth, and it has announced plans to invest in new office space and a larger and more efficient distribution facility to handle higher volumes.

The firm also plans to establish its own in-house e-commerce development team and to increase the size of its sales team. Furthermore, the company is also increasing its investment in both staff training and in its customer relationship management and data analytics capabilities.

As a result of all this investment, Majestic warned investors to expect a “flatter growth profile” in the 2015 financial year.

Quick facts: Majestic Wine PLC

Price: 256.5 GBX

AIM:WINE
Market: AIM
Market Cap: £186.33 m
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