Marketing campaign costs Majestic Wine

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Majestic Wine has warned over profits after an ill-fated and costly marketing campaign for its Naked Wines business in America and tough trading in its commercial arm.

The wine retailer said it was reviewing its commercial division after seeing sales flat-line and pressure on its profit margins as the first half proved “even more challenging”.

Earnings in the division could be around £2m lower than expected, Majestic cautioned.

The group’s woes have been compounded by its Naked Wines online business, bought in April last year for £70m, which is set to suffer a small loss after taking a hit on a failed direct mail campaign in the United States.

It will see the division slip back into the red after making a surprise maiden profit in the last financial year.

Majestic said overall group earnings for the year to April 3 2017 are set to come in lower than City expectations.

Rowan Gormley, chief executive of Majestic Wines, said: “It is very disappointing that two isolated factors are distracting from the great progress across the rest of the group.”