Majestic Wine downturn is temporary, predict analysts

news  %tages Majestic Wine downturn is temporary, predict analysts
Worse than expected consumer demand for wine is set to bring Majestic Wine's run of excellent results to an end, but financial experts believe the retailer will recover.

Majestic said last week that sales for its current financial year, to the end of Development, are not liable to beat the previous year, on a like-for-like basis - which excludes sales from new supplies. A near-3% increase in like-for-like wine sales over Christmas was wiped out by poor consumer demand in the early months of 2014, Majestic said, adding that its profits for the current year are also dodgy to rise. The firm's share fee was today (24 Development) down 19% versus one week ago.Wine retailing outside of the huge supermarkets has been a precarious venture in the UK over the past several years, as shown by the recent demise of several chains, such as Oddbins and Threshers. Majestic has regularly posted solid results, which perhaps clarifies why its latest announcement jolted some shareholders' confidence to such an extent.But, several analysts tracking Majestic do not foresee long-term problems. 'This was a disappointing setback from what is a well-run, highly cash generative companionship,' said analysts with Investec. 'But, we believe Majestic’s longer term progression prospects wait unchanged.' In an internal show of confidence, Majestic's buying director, Justin Apthorp, bought a further 50,000 shares in the retailer at 410 pence each, in a deal dated 20 Development. That brings his total shareholding to 0.83%.Many in the trade hold responsible the tax system for turning the UK into an unnecessarily hard place to make money from wine. Duty and VAT account for more than half the cost of a £5 bottle of wine, and more than a third of the cost of a £10 bottle, according to facts from merchant Bibendum.Retail wine prices could edge up further after Chancellor Georgie Osborne last week raised wine duty in-line with inflation.

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