Wine seller invests £24m to drive growth across business
- Credit: Copyright: Archant 2017
A wine seller has revealed £24m investment plans as it aims to drive growth across its business and break the half a billion pound barrier.
Majestic Wine, which owns Norwich-based Naked Wines, has said it will invest and additional £9m to £12m in the 2019 financial year, on top of £12m already announced, which it believes can double the number of customers it is attracting.
The move will mean a £3m knock to next year's profits but chief executive Rowan Gormley said the investment could lead to returns of between £48m and £80m a year in the future.
He said over the last three years Naked Wines, which has repeat sales retention of 85%, had doubled sales and become profitable in all three of its markets – the UK, US and Australia, something the company believed could be replicated with Majestic.
Mr Gormley said: 'We are in the fortunate position of having the option to accelerate growth by investing in new customer acquisition.
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'We are starting from a good place with the core business on track to meet our 2019 sales target of £500m and the market's expectation for profits and dividend in 2018.'
He added: 'We believe we can double the level of investment again while maintaining the returns, driving sustained growth in shareholder value.'
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Naked Wines, a member of the EDP/EADT Top 100 list of companies by highest turnover in Norfolk and Suffolk, posted sales of £139m in 2017 according to the latest figures.
The company offers a subscription wine service which sees 360,000 'angels' pay a monthly fee which gives access to exclusive wines and helps to reduce the cost to the consumer.
Naked, which has its headquarters on Chapel Field Road where it employs 140 people, was bought by Majestic in 2015 in a deal believed to be worth £70m with founder Mr Gormley becoming chief executive of the merged group.
In recent years the company has also branched out into gin, craft beer and artisan foods.
The group also owns Essex-based fine wine retailer Lay and Wheeler.
Majestic is forecasting sales of £484.3m for 2018 and £518m for 2019 with adjusted pre-tax profits of £16.8m and £19.9m respectively.