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Wine to be stockpiled in case of Brexit blues

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Majestic Wine has revealed plans to bolster its stocks in the UK to prevent the chances of Brexit supply disruption.

The company, which is the UK’s largest specialist wines retailer, said while trading in its core market was “sluggish” in the first half of its financial year it was to bring in additional bottles to the value of up to £8m.

Majestic is the latest major domestic company to hedge against the prospect of a “no deal” scenario when the country is due to leave the European Union in March.

Recent names to announce stockpiling include Mr Kipling owner Premier Foods and Cadbury.

Businesses fear that a hard Brexit with no transition on trade arrangements would result in chaos at ports and airports.

Majestic Wine Store
Image:
Majestic Wine Store

Majestic said it would bring in the additional inventory in the weeks before 29 March.

Shares fell almost 13% in early deals as investors reacted to its results for the six months to 1 October.

They showed that contoinued investment on bolstering customer engagement across the group, including at its Naked Wines brand, had taken its toll on Majestic’s bottom line.

It reported a loss before tax of £0.2m compared to profits of £3.1m in the same period last year.

The firm credited that investment for a 5.4% rise in revenue to almost £230m but admitted spending would continue to drag on profitability.

It also warned that “short-term headwinds” – the tough consumer spending and high cost retail environment – would impact profits ahead.

Chief executive Rowan Gormley’s statement said: “The UK retail market is tough and will continue to be a drag on performance in Retail and Majestic Commercial; whereas we had previously targeted growth, we now expect FY2019 (full year 2019) adjusted EBIT (earnings before interest and tax) across these business units to be flat at best vs FY2018.”

He added: “We were planning for tough times and we’re investing through tough times because we know that’s the route to a more profitable future.

“As a result, we now have a business that is almost 45% online and over 20% international with both the option, and intention, to invest further in order to drive returns.”

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