Profits fizz at Majestic

British wine warehouse chain Majestic today posted its eleventh consecutive year of record profits and said trading remained strong in 2004.

Majestic, which has 115 stores, said pre-tax profits of £10.6m (€16m) were 27% higher than a year ago.

New customers helped to lift like-for-like sales by 10% to £148.3m (€224.2m) during the year to March 29, outpacing the UK wine market which is growing at 6%.

Chief executive Tim How said this trend had continued into the new financial year with same-store sales ahead by 8%.

Majestic has been further boosted by its store opening programme, which it believes could result in 175 UK outlets. Three new stores are planned.

“I believe that Majestic is in a good position to continue to grow strongly in an expanding wine market,” Mr How said.

Growth is also being targeted in sales of fine wines following the opening of a distribution base in St John’s Wood, London, which can stock more than 200 different brands.

Sales of wines costing more than £20 (€30) grew by 29% during the year and now account for 1.6% of total sales in the UK.

The company expected this share to double over the next couple of years as it taps the drinking habits of affluent customers around the country.

Group sales were boosted by new business with the number of people using its mailing list increasing by 10.5% during the year to 325,000.

Mr How said the average bottle price of still wine purchased at Majestic was £5.40 (€8), more than a third higher than the market. Customers spend an average of £107 (€161.70) per transaction, compared with £104 (€157) a year earlier.

Promotional activity was helping to drive sales this summer with more than 400 offers in store, including a multibuy deal for a case of champagne and 15% off wines from Italy and Chile.

The company added that it was pleased with growth across the Channel with demand from UK shoppers pushing sales at its two Calais stores and Cherbourg ahead by 12%.