Majestic Wine 2011/12 Interim Results

Majestic Wine 2011/12 Interim Results

Overview > > Total Group sales up 8.7% to 127.8m (2010: 117.6m) > > Like for like ex VAT sales up 2.7% > > Profit before tax up 20% to 8.8m (2010: 7.3m) > > 15.2% increase in interim dividend to 3.8p per share (2010: 3.3p) > > Sales for the six weeks from 27 September to 7 November: Like for like ex VAT sales down 1.1% Total ex VAT UK store sales up 3.8% 1

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Key Performance Indicators > > Like for like transactions up 2.2% > > Like for like average sale 125, up 2.6% > > 7.7% increase in active customers to 534,000 (2010: 496,000 2009: 435,000) > > UK store sales to private customers up 3.5% > > UK store sales to business customers up 12.7% > > 20% increase in sales of fine wine (still wine above 20 per bottle) 3

UK Wine Market Year to end September 2011 Wine Market 2011 2010 Still wine value growth +3.0% +3.0% Volume growth 1.9% 0.3% Average bottle price 4.76 4.52 Source: Nielsen Majestic 2011 2010 Still wine value growth +9.0% +13% Volume growth +3.2% +8.2% Still wine average bottle price 7.13 6.67 Average transaction value 125 122 Still wine market share 3.6% 3.3% Share of total wine market 3.9% 3.5% 4

Sales Trends Year to end September 2011 > > Strong sales growth from Spain, Italy, south of France and Argentina > > Sparkling wine sales up 14%, Champagne sales level on last year Product Mix 2011 Still Wine 69.6% Champagne 13.5% Sparkling 5.9% Beer 5.9% Spirits 1.8% Other 3.3% Still Wine % Split 2011 Majestic Market France 34.3% 14.0% New Zealand 19.0% 5.6% Spain 10.6% 8.2% Italy 8.6% 15.0% Chile 8.4% 9.0% Australia 7.6% 21.0% South Africa 4.4% 8.0% Argentina 4.4% 1.3% 5

Sales 26 weeks ending 26.09.11 27.09.10 Change 000 s 000 s % UK retail store sales 103,826 96,025 8.1 Sales to large corporates* 13,124 10,446 25.6 Total Majestic UK sales 116,950 106,471 9.8 Lay & Wheeler 6,096 6,820 (10.6) Majestic in France 4,726 4,306 9.8** Total Sales 127,772 117,597 8.7 UK retail sales growth Net new store space 5,237 5.5 Like for like sales growth of 2.7% 2,564 2.6 7,801 8.1 * Sales through King s Cross depot and head office. ** On a like currency and like stores basis sales 4.6.%. 6

Gross Margin 26 weeks ending 26.09.11 27.09.10 Change 000 s 000 s % Total sales 127,772 117,597 8.7 Cost of sales (100,518) (93,257) 7.8 Gross margin 27,254 24,340 12.0 Gross margin % 21.3 20.7 Gross margin % 2010 20.7 Labour cost absorption (0.1) Increase in product margin 0.9 Currency contract mark to market 0.2 Increase in large corporate sales (0.4) Gross margin % 2011 21.3 7

Operating Costs 26 weeks ending 26.09.11 27.09.10 Change 000 s 000 s % Store occupancy costs 6,358 5,840 8.9 Fleet costs 1,642 1,358 20.9 Store depreciation 1,360 1,260 7.9 Depot wages 567 527 7.6 Other distribution costs 1,312 1,240 5.8 Total distribution costs 11,239 10,225 9.9 Marketing costs 1,488 1,292 15.1 Staff costs 4,039 3,734 8.2 Other administrative costs 1,957 1,951 0.3 Total administrative costs 7,484 6,977 7.3 8

Profit, EPS & Dividend 26 weeks ending 26.09.11 27.09.10 Change 000 s 000 s % Profit before tax 8,813 7,347 20.0 Income taxes (2,541) (2,248) Profit for the period 6,272 5,099 23.0 Tax rate % 28.8 30.6 Diluted EPS 9.8p 8.2p 19.5 Dividend per share 3.8p 3.3p 15.2 9

Lay & Wheeler 26 weeks ending 26.09.11 27.09.10 000 s 000 s Sales 9,216 14,790 Less : net en primeur deferral (3,120) (7,970) Sales statutory basis 6,096 6,820 Profit before interest 798 1,424 Less : net en primeur deferral (506) (1,347) Profit statutory basis 292 77 Add back amortisation 112 112 Profit pre-amortisation 404 189 Deferred en primeur profit Opening en primeur balance (2,441) (876) Movement in en primeur (506) (1,347) Closing en primeur balance (2,947) (2,223) 10

Segment Results 26 weeks ending 26.09.11 27.09.10 Change 000 s 000 s % Revenue Majestic 116,950 106,471 9.8 Lay & Wheeler 9,216 14,790 (37.7) Majestic in France 4,726 4,306 9.8 Segment revenue 130,892 125,567 4.2 Less: en primeur adjustment (3,120) (7,970) Total revenue 127,772 117,597 8.7 Profit before interest and tax Majestic 8,004 6,878 16.4 Lay & Wheeler 798 1,424 (44.0) Majestic in France 658 574 14.6 Segment results 9,460 8,876 6.6 Less: en primeur adjustment (506) (1,347) Total profit before interest and tax 8,954 7,529 18.9 11

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Cash Flow 26 weeks ending 26.09.11 27.09.10 Change 000 s 000 s 000 s Operating profit 8,954 7,529 1,425 Depreciation / amortisation 2,186 2,068 118 Working capital movement 2,737 3,316 (579) Tax paid (3,467) (2,716) (751) Net capital expenditure (6,843) (3,266) (3,577) Term loan (5,600) (350) (5,250) Net returned to shareholders (4,279) (4,264) (15) Other (189) (290) 101 Total cash flow (6,501) 2,027 (8,528) Net debt (874) (1,564) 690 13

New Store Roll-Out 8 new locations Evesham Weston-Super-Mare Fleet Livingston Hale Dundee Worthing Bury St Edmunds 3 openings since the half year end Clitheroe Ripon Braintree Chesterfield and West Kirby, Wirral to open in November To give 176 stores trading in the UK Expect three further openings in Q4 14

New Store Evesham 15

Ecommerce > > Sales from orders placed online up 8.7% to 11.2m representing 9.0% of UK retail sales (2010: 9.1%) > > Transactions increase of 5.9%; average spend of 154 (2010: 150) > > 240,000 customer email addresses (2010: 225,000) > > Increased use of intelligent targeted email > > Greater customer engagement through wine reviews and ratings > > Increased video content to promote Majestic Wine Events 16

Ecommerce 17

Brand Advertising Test > > In Autumn 2010 we commissioned research into wine consumers who do not shop with Majestic > > A key finding was a lack of awareness and understanding of Majestic amongst potential customers > > In response we decided to test advertising the Majestic brand > > Test runs from 14 November for four weeks: TV adverts in London area Supported by national press > > Full review and further research to assess effectiveness in January 2012 18

Brand Advertising Test 19

Lay & Wheeler > > Total sales of 9.2m for the period (2010: 14.8m) > > Statutory sales of 6.1m (2010: 6.8m) and profit 292k (2010: 77k) > > Management level profit of 798k (2010: 1.4m) > > 2010 Bordeaux en primeur campaign sales of c. 6m (2009 en primeur: c. 9m) > > Highly rated 2010 Burgundy en primeur to come in Q4 20

Lay & Wheeler 21

Majestic in France > > Profit before interest and tax of 658k (2010: 574k) > > Like for like sales increase of 2.5% > > Like for like transactions up 3%; ATV 205 (2010: 209) > > Pre-orders now represent 38% of sales; average spend of a pre-order is 508 (2010: 524) > > Like for like sales for the six weeks from 27 September to 7 November down 3.6% 22

Majestic in France 23

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Majestic Awards International Wine Challenge 2011 High Street Chain of the Year Decanter Retailer of the Year Awards 2011 Readers Award Best National Wine Merchant Oracle Retail Week Awards 2011 Customer Service Initiative of the Year for The Wine Course Speciality Retailer of the Year 25