Retailer Majestic Wine has said it is time to put its “foot on the gas” and ramp up sales growth as it cheered a return to profit.
The wine warehouse chain, which has 210 branches in the UK and two in France, posted bottom line pre-tax profits of £3.1 million for the six months to October 2 against losses of £4.4 million a year earlier.
Underlying per-tax profits jumped to £6.8 million from £51,000 a year earlier.
Shares surged 7% after the results.
It thanked a boost in customer numbers for the turnaround, which helped offset a slowdown in underlying retail sales growth to 2% after hiking prices in the face of soaring buying costs from the weak pound and amid “tough” UK conditions.
The group said it has increased the number of repeat customers to 510,000 from 475,000 a year earlier.
Two years into a three-year turnaround, Majestic said it now plans to increase its rate of sales growth by “steadily” increasing spending to attract more new customers.
Chief executive Rowan Gormley said: “The plan is on track.
“Two years in and profits are growing, our foundation is solid and we are ready to accelerate growth.
“We have the opportunities to invest in new customers and a team excited to focus on what they do best. It’s time to put our foot on the gas.”
Group-wide sales growth stood at 5.7%, including a 1.2% boost from the weak pound flattering sales in US dollars, which puts it on track for its target to hit £500 million of sales by 2019.
Its online Naked Wines business saw sales leap 10.9% higher to £67.8 million, with profits across all three of its markets worldwide.
The group said Naked Wines’ revenues in the last 12 months were now double the level reported when it bought the business in April 2015.
Majestic’s recovery has seen the group expand and look to retain its customer base, slow down branch network expansion and acquire new customers for Naked Wines.
But it said it still had more to do in keeping customers of the core retail warehouse chain, with customer retention down over the half year.
Phil Carroll, an analyst at Shore Capital, said Majestic had unveiled a “good” set of interim results and a “significant improvement in profitability”.