20th Mar 2014 09:16
LONDON (Alliance News) - Shares in Majestic Wine PLC plummeted Thursday morning, after the retailer said it expects its pretax profit and like-for-like sales for the current financial year to be flat, and expects investments next year to dent its profits even further.
In a Christmas trading update in January, Majestic Wine had said total UK store sales rose 5.9% in the 10 weeks to January 6, with like-for-like sales up 2.8%. It said some customers decided to splash out over Christmas, recording strong growth in sales of fine wine costing more than GBP20 a bottle.
However the UK wine retailer said Thursday it has experienced challenging trading conditions since the start of the 2014 calendar year, and with two weeks to go until its year end, now expects like-for-like sales to be flat for the financial year as a whole, and pretax profit broadly in line with the previous financial year.
Majestic Wine said that, as part of its plans to increase its store footprint to over 300 and expand its e-commerce operations, in the year ahead it will be pumping money into investing in "necessary infrastructure enhancements", including new office space, a larger more efficient distribution facility to handle higher volumes and establishing its own in-house e-commerce development team.
However the group warned that the investments will hit profits in the short term, and it now anticipates flatter profit growth in the 2015 financial year.
"The Majestic proposition remains compelling to the consumer and our future growth prospects remain bright. I am confident that the investments we are making over the course of the next twelve months will drive future shareholder value," said Chief Executive Steve Lewis in a statement.
Shares in Majestic Wine were down 96.25 pence Thursday, trading at 408.75 pence per share, making it the biggest faller on AIM.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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