20th Jun 2016 06:53
LONDON (Alliance News) - Majestic Wine PLC on Monday reported a drop in profit in its recently ended financial year due to costs associated with its transformation plan and acquisition of Naked Wines, but said it is on track to meet its three-year target as it recorded strong growth in revenue.
The wine retailer said its pretax profit in the year ended March 28 dropped to GBP4.7 million from GBP18.4 million the year before, even as revenue rose to GBP402.1 million from GBP284.5 million.
Like-for-like sales at Majestic Retail grew by 4.8% in the year, which is the division's first positive performance in four years, while the Naked Wines business achieved record sales of GBP102.5 million since acquisition last year, driven by strong growth in the US.
Profit, however, was hit by investments the company is making for its transformation plan as well as borrowing costs related to its Naked Wines acquisition.
Majestic said it is on track to deliver GBP500 million in sales by 2019, having made "good progress" in the first year of the transformation plan, which includes improving its IT system for supply-chain management and its shopping experience.
Majestic said it will not pay a dividend for the year, but will commence a new dividend policy targeting a payout of 35% of full-year adjusted earnings in the first half of financial 2017.
"We have taken the first step on a long journey; it was a good start but it is just the first step. Early signs are that the plan is starting to work. Strong sales figures reflect the hard work being done on the ground by the whole team," Chief Executive Rowan Gormley said in a statement.
"We still have lots to do and although we are on course to deliver our three year plan, it won't be without challenges. Trading conditions remain tough in the UK especially, and we expect them to stay that way. Volatile currency movements will push up cost of goods. We are implementing a new supply chain and IT system, both of which are complex projects. Our plan however remains unchanged, as does our goal - GBP500 million sales by 2019," he added.
By Karolina Kaminska; [email protected] @KarolinaAllNews
Copyright 2016 Alliance News Limited. All Rights Reserved.
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