The taste for fine wine provides Majestic profits

Countries such as Argentina, Italy and Spain also proved popular with UK buyers keen to expand their horizons beyond more obvious countries.

Majestic said wines from New Zealand, South Africa, Chile, Portugal and the Loire performed well while sales of sparkling wine are growing strongly.

The group said that while the Euro 2012 football tournament “neither helps or hinders sales”, with wine not the top tipple for football fans, it saw a “very strong” sales in the two weeks leading up to and including the Diamond Jubilee.

Chief executive Steve Lewis is upbeat about the impact from the London Olympics.

“If the sun shines and we start winning medals, I think the British will go out and celebrate,” he said.

The group, which has 181 stores in the UK, said the number of customers who made purchases in the last year increased by 11 per cent to 568,000, while the average bottle price of still wine rose to £7.34 from £6.94 the previous year.

Majestic reported an 18.5 per cent jump in sales of fine wines priced at £20 per bottle or more from Burgundy, Bordeaux and New World ranges.

This followed the decision to roll out fine wine to 80 per cent of its stores.

All shops will carry the fine wine range within the next 12 months.

Talking about the popularity of fine wines, Mr Lewis said: “It is about people treating themselves at home.”

The group, which recorded 2.6 per cent growth in like-for-like sales in the year to April 2, reported pre-tax profits of £23.2m, up from £20.3m the previous year. But sales have slipped since then to growth of 0.6 per cent in the first 10 weeks of the new financial year to June 11, despite the boost provided by the Diamond Jubilee fortnight.

Majestic warned that the trading environment is likely to continue to be difficult.

The group is confident of being able to expand to 330 stores after opening 16 in the last financial year, including new stores in Ripon and Wakefield.

The group has 10 stores in Yorkshire including a recent opening at Northallerton in North Yorkshire.

Total group annual sales rose nine per cent to £280.3m.

Online sales rose eight per cent on last year, representing 10 per cent of total UK retail sales.

Majestic recently cut its minimum online order to six bottles to boost internet sales.

The average transaction value rose 1.4 per cent to £144 and the company processed 190,000 orders, up from 175,000 last year.

Sales to businesses, which account for 24 per cent of total revenues, rose seven per cent.

Shares in the company, which have gained a quarter since the start of the year, fell two per cent yesterday to close at 403p.

Analysts at Singer Capital Markets said in a note: “Majestic has delivered a solid set of preliminaries which are a touch ahead of consensus expectations.

“The start to the new financial year has been volatile with UK like-like sales slowing but still up 0.6 per cent.

“Majestic remains a well managed business, with a unique, high-return business model which still has ample scope to grow.”

Analyst Patrick Coffey, at Liberum Capital, said: “The macro-outlook remains uncertain in 2013, however the excellent long-term structural growth story remains intact and the rollout story should protect earnings if the macro worsens.

“In the long term we continue to like the store rollout strategy, the improving returns and growth in business to business sales.

“In the short term, we expect some pressure on the share price, but we believe this will represent an attractive entry point for long-term fund managers looking for attractive growth and a solid yield.”

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