Majestic Wine boasts an increase in sales, but is hit by a drop in profits.

Majestic Wine PLC, the UK’s largest wine specialist, has today (15 June) announced its preliminary results for the year to 30 March 2009, with a sharp fall in profits.

Despite reporting an increase in total group sales of 2.4% to £201.8 million, profit before tax has plummeted by 55.8% to £7.4m.

The loss has been attributed to “very challenging trading conditions in the second half of the financial year”. The global downturn is having detrimental effects on a number of its business areas including corporate sales, with Champagne sales on a downward spiral, as businesses cut back on entertainment budgets.

On a more uplifting note, the price of an average bottle of wine purchased at Majestic increased to £6.35, up from £5.98 in 2007. The company has also announced an increase in its online sales, with a growth of 16% on the previous year, representing 9.1% of all UK retail sales.

Steve Lewis, Chief Executive of Majestic, commented on the results: “The resilience of our core consumer business is encouraging, our market share has held steady and we are confident Majestic is well positioned to benefit from any upturn in the economy.”

In March 2009, the wine merchant acquired Lay and Wheeler, a fine wine specialist, and the company says the integration of this new acquisition is going well, with encouraging sales to date.

Chairman Simon Burke attributed a large part of the decline in profits in having to write-down the value of its French business by £5.3m, where sales at its three northern France stores have been very poor. The depreciation of the Euro has also caused problems.  

However, Mr Burke went on to say that the company has experienced a more encouraging start to the new financial year, with UK like-for-like sales up 2%.