22nd Nov 2018 10:43
LONDON (Alliance News) - Majestic Wine PLC on Thursday said it swung to a loss in the first half of its financial year, while guiding for annual profit in two divisions to be "flat at best".
Shares in the wine retailer were trading down 18% at 307.00 pence each on Thursday.
For the six months to October 1, Majestic Wine posted a pretax loss of GBP200,000, compared to a GBP3.1 million profit a year prior, due to increased new customer investment.
Meanwhile, revenue increased by 5.4% to GBP229.1 million from GBP217.4 million a year ago.
"We're doing well in a tough market. We set out a plan at our capital markets day in April 2018 and we are delivering against it. That plan was to accelerate growth by investing in new customers and, so far, the plan is on track," Chief Executive Rowan Gormley said.
The wine retailer kept its interim dividend at 2.0 pence per share.
Looking ahead, the company is on track to hit its GBP500 million sales target in the full-year.
However, due to a tough UK retail market, earnings before interest and taxes in the firm's Retail and Majestic Commercial units are expected to be "flat at best". Majestic Wine had previously "targeted growth" in those units.
Furthermore, the firm is planning to invest GBP20 million or more to accelerate growth, leading to a further reduction in profit.
"We were planning for tough times and we're investing through tough times because we know that's the route to a more profitable future. As a result, we now have a business that is almost 45% online and over 20% international with both the option, and intention, to invest further in order to drive returns," the firm added.
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