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Majestic Wine ramps up investments in online Naked Wines business

Majestic Wine ramps up investments in online Naked Wines business
FILE PHOTO: A general view of a Majestic Wine Warehouse in Cheadle Hulme, Stockport, north-west England on June 13, 2015. REUTERS/Andrew Yates   -   Copyright  Andrew Yates(Reuters)
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(Reuters) – Majestic Wine PLC on Monday said it would sell assets, close stores and review its dividend as part of a wider plan to invest more and focus on its online Naked Wines business.

Shares of the company, one of Britain’s best-known wine merchants, were expected to open down as much as 10 percent, according to premarket indicators.

The company, which plans to rename itself Naked Wines Plc, said it expects to raise its investments in Naked by 6 million pounds to about 26 million pounds in 2020.

Majestic, which bought Naked Wines in 2015, expects to take largely non-cash restructuring charges of up to 10 million pounds in 2019.

“We also believe that a transformed Majestic business does have the potential to be a long-term winner, but that we risk not maximising the potential of Naked if we try to do both,” Chief Executive Rowan Gormley said.

Majestic has been struggling in recent years due to tough competition from discount supermarkets Aldi and Lidl UK, and online rivals offering cheaper wines.

It has been trying to grow its business outside of the UK as Britain readies to exit from the European Union, with online sales accounting for about 45 percent of its business and 20 percent coming from its international business.

The company expects to achieve its sales target of 500 million pounds for full-year 2019 and adjusted profit before tax around the consensus level of 11.1 million pounds.

(Reporting by Abinaya Vijayaraghavan in Bengaluru; Editing by Gopakumar Warrier, Bernard Orr)

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