Majestic profits drop but Naked Wines deal provides hope

15th Jun 2015 07:34

Annual profits at Majestic Wine dropped by nearly a quarter in the year to 31 March, though the retailer gave an optimistic outlook on the back of its recent acquisition of Naked Wines.The AIM group, which bought the customer-funded online wine business for £70m in April, reported a pre-tax profit of £18.4m, down 22.5% from £23.8m the year before.The decline resulted from a 30 basis-point fall in the gross margin to 22.7%, a 5.7% increase in distribution costs to £28.3m and a 31.4% jump in admin costs to £18.5m, partly due to one-off costs related to the Naked deal.Adjusted pre-tax profit, excluding the exceptional items linked to the acquisition, fell 12.2% to £20.9m but was in line with guidance.Nevertheless, revenues increased 2.3% over the year to £284.5m, with the number of active customers up 5.4% at 678,000.Majestic said online sales were up 12.4% at £31.3m and now represent 12.1% of UK retail sales.Chief executive Rowan Gormley, who has only been boss for 10 weeks, said it was clear that the enlarged Majestic group has "excellent future prospects"."Majestic Wine has many unique competitive advantages, especially its incredible staff. When combined with Naked Wine's digital strengths, and both businesses ability to source exclusive and exciting wines for their customers, we are uniquely placed to build a fast growing international leading wine specialist."The company is set to unveil a major review of the business at the time of its interim results.As previously announced, Majestic's final dividend and interim dividend for the current financial year will be withheld as the company reduces balance-sheet leverage following the Naked Wines deal.