Majestic Wine PLC (LON:WINE) was the toast of the town on Thursday as it reported a sharp rise in first-half profits, having barely broken even this time last year.
The specialist wine retailer saw adjusted pre-tax profits rise more than £6.7mln in the six months ended 2 October to £6.77mln (H1 2016: £0.05mln), despite a “tough market”.
Interim divi hiked by a third
That was on higher sales of £217.4mln – up 5.7% compared to the £205.6mln generated in the first half of 2016 – as the number of repeat customers grew to 510,000 from 475,000.
Majestic said the strong top line performance so far this year leaves it on track to hit its £500mln annual sales target by 2019.
Naked Wines, which funds independent winemakers to make wines at a preferential price, proved a hit over the period and was profitable in all three of its geographic markets. It posted adjusted underlying earnings (EBIT) or £4.72mln compared to a loss of £2.78mln last time around.
On the back of the solid outing, Majestic hiked its interim dividend by a third to 2p a share.
Turnaround plan on track
The AIM-listed firm – worth around £273mln – is two years into a three-year turnaround plan and chief executive Rowan Gormley said now was the time to “put our foot on the gas”.
He will look to boost sales growth by “steadily” increasing spending to attract more new customers, while he also expects the recent move to give managers a bigger cut of their stores’ profits to continue to bear fruit.
“The plan is on track,” said Gormley.
“Two years in and profits are growing, our foundation is solid and we are ready to accelerate growth. We have the opportunities to invest in new customers and a team excited to focus on what they do best. It's time to put our foot on the gas.
“The focus on empowering our wonderful store teams in Majestic Retail has finally borne fruit, with improved staff engagement flowing through into improved customer engagement, which means improved loyalty and retention.”
Shares gained 10.8% to 424.5p on Thursday afternoon.