Majestic Wine first half profit slumps 50%

16th Nov 2015 08:07

(ShareCast News) - Majestic Wine posted a 50% drop in first half pre-tax profit on the back of a £2.6m impairment charge and suspended its interim dividend.For the 26 weeks to 28 September, pre-tax profit came in at £4.3m from £8.5m in the same period last year on revenue of £181.6m, up from £133.8m.The wine retailer put the fall in profit down to charges relating to the Naked Wines acquisition, interest costs and exceptional items.As previously stated, Majestic did not declare a dividend and said that guidance issued at the time of the acquisition for progressively reinstating the dividend whilst deleveraging the balance sheet remained unchanged.Majestic also announced that it has launched a new business strategy to deliver sustainable, volume-led earnings growth and improved return on capital, which targets over £500m sales by 2019.Chief executive officer Rowan Gormley said: "We have a clear plan, which will require investment and take three years to complete, but will also deliver a better business that can create sustained growth in shareholder value."Fortunately, the board acted decisively and quickly when it became clear that a change of direction was required, so our core competitive strengths are intact and provide a sound foundation to work from. As a result, profit for the current year is expected to be impacted by the increased investment derived from our successful test period after which we expect to see sustainable growth as the anticipated returns from our initiatives are realised."At 0820 GMT, Majestic shares were down 5.8% at 292p.