The CEO’s ambitious transformation programme is delivering results and Majestic Wine PLC (LON:WINEW) is now in good shape to execute on plans to double its expenditure on new customer recruitment at an attractive expected future payback of 4.7x for every £1 invested. FY18 results demonstrated that the entrepreneurial Naked Wines division is the clear growth engine, providing opportunity to reduce UK earnings exposure and accelerate online sales.
Clear progress
Two years into Majestic’s transformation programme a solid set of FY18 results reinforces progress. The entrepreneurial Naked Wines business is the clear engine for growth, delivering an 11.3% increase in revenue to £156.1m and six-fold rise in adjusted EBIT to £8.7m. The Majestic Retail adjusted EBIT flat-lined at £13.3m, with FX pressure on margins wiping out a 1.9% revenue increase to £263.8m. In our view, given the wider high street woes and price competition from the supermarkets, this is a credible result. A renewed focus on Majestic Commercial provides opportunity to inject momentum back into the underperforming division.
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