Majestic Wine shares sour as booze seller swings to a loss amid plans to sell off its 200 UK stores
- Majestic Wine shares sunk by more than 8 per cent in early trading to £2.93
- The wine giant reported a £8.5m full-year loss, down from £8.3m profit last year
- Boss put the loss down to greater investment in its fast-growth online division
Majestic Wine shares flashed red in early trading on Thursday after the booze giant reported a bruising full-year loss.
Majestic racked up losses of £8.5million in the last 12 months, compared with profits of more than £8million a year ago.
This, along with the suspension of the full-year dividend, soured investor sentiment and sent shares down by more than 8 per cent to £2.93.
Shutting up shop: Majestic Wine is in the process of selling off its 200 UK stores
The group said the losses were linked to its radical plans to sell off its 200-store retail estate and focus instead on its fast-growing online division, Naked Wines.
While sales nudged up 1.5 per cent to £268million at its stores, the firm admitted that this was hard won, with heavy promotions and discounts eating into its profits.
It also ploughed substantially more cash – £19million – into growing its fledgling online arm.
The firm’s shares nudged up earlier this week amid unconfirmed reports that Waterstones’ US owner Elliott Advisors has its eye on the £100million portfolio of wine warehouses.
Private equity firms OpCapita and Fortress have also been linked to the deal.
Today Majestic remained tight lipped but said it is close to clinching a sale, with ‘advance discussions’ expected to conclude in a successful sale later this summer.
Boss Rowan Gormley added that multiple bidders expressed interest.
Boss Rowan Gormley (above) said the company is at a crossroads
He said: ‘We are at a crossroads in the company’s history. As laid out in March, we have taken the difficult but important decision to focus on Naked and exit from Majestic.
‘As at the date of this announcement, our intention is to sell the business and we are at an advanced stage with multiple bidders.
‘A further update will be provided if and when negotiations conclude, at which point we will seek shareholder approval to move ahead.’
Across the group, sales jumped 6.3 per cent to more than half a billion, spearheaded by a 14.5 per cent spike at Naked Wines as it grew its customer base.
The retail business and Naked arm will be run independently for the rest of the year if a sale is not secured this summer, with the process restarting in early 2020, the company said.
Alongside the full-year figures, the firm also revealed that its chairman of four years Greg Hodder will be stepping aside and replaced by chairman elect John C Walden.
In January, the wine seller said Christmas trading was more difficult than it anticipated as economic uncertainty in the run-up to Brexit took its toll.
It also admitted to stockpiling up to £8million worth of wine in preparation for a no-deal exit from the bloc.