Majestic Wine goes flat after supermarket price cutting takes its tollComments Off on Majestic Wine goes flat after supermarket price cutting takes its toll
Its shares dropped 14% after it said sales from stores open at least 12 months rose by just 1.1% in the 10 weeks to Monday.
That was well down on the 2.8% increase it had reported for the first six months of the financial year.
“It was a difficult Christmas period characterised by promotional activity and we are now focused on delivering our final quarter’s trading,” chief executive Steve Lewis said.
“We anticipate this competitive pricing environment will continue throughout much of 2015.”
Majestic had to respond to the discounts being offered by the supermarkets and price cutting meant it sacrificed around 0.5% of its profit margin over the period.
Today its own broker Investec cut its profit forecast for the year to March by 6% to £22 million, which would be lower than the £23.8 million achieved last year. The shares fell 55p, or 14%, to 343p.
The latest quarter brings overall trading for the first 40 weeks of Majestic’s financial year to a reasonable 2% rise in like-for-like sales.
Investec’s Kate Calvert said she still expects growth to be kick-started again in 2015.