Rowan Gormley bids to cheer up Majestic Wine
- Credit: ©Archant Photographic 2010
Majestic Wine reported a slide in annual profits today as its new boss pledged to scale back new store openings and warned that earnings would take a further hit as he tries to inject some fizz into the business.
Chief executive Rowan Gormley said he wanted to make the shopping experience 'simpler, easier and more fun' for customers as part of a series of initiatives to turn around the group's fortunes and will cost around £3 million to achieve.
Pre-tax profit fell 22% to £18.4 million in the year to the end of March though like-for-like UK retail store sales rose 1.9%.
The group had been planning to expand to 330 stores from its current 213 but the new boss said today that he wanted to limit new openings to 20 to 30 locations 'that can deliver a good return on investment'.
He added: 'It is obvious that we need to make investments to reinvigorate Majestic Wine. These investments will initially suppress profit in the short term but I am confident we can rebuild momentum in this excellent business.'
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Mr Gormley joined Majestic in April after it bought Norwich-based online rival Naked Wines, a company he founded in 2008, for up to £70 million. He replaced Steve Lewis, who left the retailer in February after poor sales.
The new boss has embarked on a 'thorough strategic review' of the business.
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He said: 'Although I have only been chief executive for 10 weeks, it is clear to me that the enlarged Majestic Group has excellent future prospects.
'However, it is also clear that Majestic Wine had a period of challenging trading in recent years. Profit declined last year with growth in online and commercial sales not enough to offset the underlying sales decline in the more mature Majestic stores.
'There are a number of areas where customers are telling us that we need to do better, and issues which are holding us back need to be addressed.'
Among new initiatives is investment in staff training and retention for Majestic's workforce of more than 800.
Mr Gormley said he also wants to build sustainable sales through personalised service and rebuild the supply chain to optimise availability, as well as delivering 'robust' IT.