Majestic Wine has revealed a turnaround strategy on the back of ambitions to reach a £500m+ sales target. Within four years.
Profits halved in the wine specialist‘s first six months of the year to £4.3m, which the retailer attributed to the takeover of online wine seller Naked Wines as well as other exceptional costs.
Majestic‘s new game plan aims to deliver “sustainable, volume led earnings growth and improved return on capital” and will refocus attention from store openings to new customer recruitment in order to drive higher returns from the current level of investment. As a result, the total UK store target has been reduced from 330 to 230, currently 211.
“Six months into my new job it is clear to me that we have a solid core business at Majestic, and two great growth engines in Naked and our Commercial business,” said Majestic CEO Rowan Gormley”.
“We have a clear plan, which will require investment and take 3 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.”