Fine wine sales fuel Majestic expansion
premium wine market brought a 10.7 per cent increase in year end
operating profit, encouraging the firm to expand its UK shop base.
Majestic, which now has 129 stores in Britain and three in Northern France, yesterday posted profits of £14m (€20.5m) for the year ending 27 March 2006, up from last year's £12.7m.
Total sales were up six per cent to £172.2m, while like-for-like sales rose 3.8 per cent.
The wine group opened six new stores during the financial year, with a further two opening today in Bicester and East Molesey. New fine wine display areas were added to five stores - bolstering sales - with another 25 facelifts on their way.
The group is now in negotiation to acquire new locations, and already owns a landbank of 30 freehold sites - two of which are in development.
"We believe Majestic is in a strong position to continue to expand market share with a potential for 200 UK locations. We see good potential for the future growth of Majestic," said chief executive Tim How.
Rising disposable incomes and higher aspirations have encouraged consumers to drink less but spend more on better quality beverages. Majestic has been tapping the trend by extending its champagne and premium ranges.
As a result, sales of fine wine rocketed, with a 30 per cent rise in demand for bottles priced at £20 and more.
The average bottle price of still wine purchased at Majestic increased to £5.59 from £5.51, and the average spend per transaction has rose £5 to £118.
However, Majestic's three French stores selling beer and wine, based around the Calais region, are not doing so well. The group posted a decline in like-for-like sales of 7.1 per cent, brought about by tough trading conditions in the highly competitive supermarket booze trade.
The firm also said UK daytripper traffic had dipped over the last 12 months, with less people prepared to make the channel crossing for cheaper beer and lager.
