Companies: MJW   

Wine seller Majestic keeps growing, despite the inclement retail climate. Burgeoning internet sales (up 38%), an increase in store openings (from six last year to the ‘eight to ten’ planned) and a still-growing wine market (4.3%) imply further success this year.

The AIM-listed group has 129 stores (owning 20 freeholds), having opened two stores in June, and chief executive Tim How supposes Majestic has the ‘potential for 200 UK locations’. The internet now represents 5.7% of UK retail sales, with the database doubling to over 100,000 email addresses.

The largely graduate workforce helped boost sales at the wine warehouse 6% to £172.2m for the year to March, with a like-for-like sales improvement of 3.8%. Profits before tax and exceptionals rose 9.8% to £14.5m, earnings by 20.6% to 16.4 and a final dividend of 5.1p lifted the year’s total 27.3% to 7p.

Like-for-likes were down 7.1% in the company’s French booze cruise stores in Coquelles and Cherbourg and its 12,000 sq ft Calais superstore, due to the decline in day trips. To react, How says Majestic is going to improve the range, customer service and focus on website pre-ordering, but although ‘this remains and important and profitable part of the business’ he expects to further like-for-like sales declines.

Partly boosted by the World Cup, like-for-likes in the first 11 weeks of the new financial year are up 8.6%, ahead of forecasts. Broker Teather & Greenwood forecasts £16.1m and £17.7m profits for the next two years, with 16.9p and 18.6p earnings per share. Trading off prospective p/e ratios of 17.9 and 16.2 the shares are well worth holding.