Will Majestic Wine have benefited from a boozy Christmas next Tuesday?
It may have taken a while, but 2017 ended up being a pretty great year for Majestic Wine. From an opening price of £3.21 the stock managed to enter 2018 at £4.54, marking a 41% increase over 12 months. The year wasn’t without a few hairy moments, however, with the company languishing below the £3.25 mark between June and September. Majestic Wine PLC now sits at a current trading price of £4.55.
The brunt of the firm’s impressive 2017 growth came in the aftermath of November’s half year results, and for good reason. Across the 26 weeks ending 2nd October 2017 Majestic Wine posted a huge £6.7 million jump in adjusted pre-tax profit to £6.8 million, having basically broken even at the same point the year previous. This was thanks to a 5.7% increase in revenue to £217 million, with underlying sales also rising by a healthy 4.2%, as Naked Wines achieved ‘profitability in all three geographical markets’ – sales were up an impressive 9.9% in the USA – and Majestic Retail grew ‘despite a tough market’.
With CEO Rowan Gormley capping off the update by stating that it was time for Majestic Wine to put its ‘foot on the gas and accelerate growth’ investors were more than willing to pop a few corks. The stock surged more than 22% higher in the week that followed those interim figures, at one point briefly hitting a 17 month peak of £4.72.
Investors will be looking for evidence of this acceleration on Tuesday, when Majestic Wine reveals the state of its festive trading. The same release at the start of 2017 saw the firm post a 12.4% rise in sales (at constant exchange rates) for the 10 week Christmas trading period, providing Majestic with a lofty bar to try and clear.
Majestic Wine PLC (LON:WINEW) has a consensus rating of ‘Buy’ alongside an average target price of £4.05.
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