Majestic Wine’s new chief executive today set out priorities for the business that include resizing the store estate in the light of online sales, making the shopping experience “simpler, easier and more fun,” while building sales growth through personalised service.
Rowan Gormley (pictured), who joined Majestic 10 weeks ago when it bought the social media-powered pureplay Naked Wines that he previously headed in a deal worth up to £70m, said the company clearly had “excellent future prospects” but had faced “challenging trading” in recent years.
“Profit declined last year with growth in online and commercial sales not enough to offset the underlying sales decline in the more mature Majestic stores,” he said. “There are a number of areas where customers are telling us that we need to do better, and issues which are holding us back need to be addressed.”
He said that strong growth in online sales challenged assumptions on how many stores Majestic requires – and said that rather than aiming for a network of 330 stores, it would rather need between 225 and 250. In the coming year it will open between 20 and 30 new stores, with decisions based on potential return on investment. Stores have a multichannel function, enabling click and collect for customers of both Naked Wines and Majestic Wines.
Gormley’s comments came as Majestic Wine reported sales of £284.5m in the year to March 30, a 2.3% rise compared to the same time last year, while pre-tax profit fell to £18.4m, reflecting higher administrative costs and lower profit margins. Online sales grew by 12.4% on last year, and now represent 12.1% of total UK sales. Some 281,000 orders were processed during the year, 14.7% more than at the same time last year. But average online transaction value has fallen by £2, or 1.8%, to £133.
Majestic now boasts a single view of the customer, showing both online and in-store purchases, which has in turn enabled segmented customer email campaigns. It has recently launched a mobile app, myMajestic, which enables customers to store their purchase history and has to date been downloaded by 19,000 customers to “encouraging” feedback that will inform the future development of the app.
Other priorities outlined by Gormley include investment in staff training and retention, while rebuilding the supply chain to improve availability in stores and reducing working capital requirements. Robust and scalable IT will be introduced to underpin innovation, while new store openings will be limited to those 20 or 30 locations that have the best potential for good return on investment.