Majestic Wine crashes on profit warning over US blunders
Majestic Wine shares were in the gutter today after chief executive Rowan Gormley issued a profit warning and said the wine merchant had taken a hit from tough trading.
Gormley said it was “disappointing” as his firm admitted that first-half UK sales growth in the commercial division — which supplies drinks to pubs and restaurants — was flat. The shares crashed 33%.
An internal review to “find a better, more profitable approach” has been launched.
The firm added that its Naked Wines online business — which it bought last year — would suffer after a direct mail campaign in the US flunked.
As a result, profit for the present financial year ending April 2017 is expected to fall around £4 million short of the £16 million the market had forecast.
The City was unimpressed and shares in Majestic Wine dropped by more than 108p to 325.08p.
Analysts at Peel Hunt said the shares will find the next few days “tough going”.
However, Gormley stressed that Majestic Wines’ retail arm was performing well.
He told the Evening Standard: “The Indian summer has meant sales of Provence rosé in London have reached new heights.”
The firm insisted it is still on track with a three-year plan to hit sales of £500 million by 2019.