Home » Uncategorized » Has Majestic Wine (MJW) Lost its Bottle ?

Has Majestic Wine (MJW) Lost its Bottle ?

It is amazing how CEOs and company directors prefer to make themselves look stupid, rather than admit to serious management errors which could reflect on their competence and suitability and in some cases the competence of their directors. MJW must have thought long and hard to try and shift the blame for the results of the last 2-3 years on to external causes.

For example the 2013 interim results showed like for like UK sales down by 0.4%. MJW claims they were impacted by Easter being at the wrong time of the year – personally I always thought Easter fell at er .. well at Easter. And then believe it or not the Queens Jubilee celebrations made a further impact later in the half year. Please note that in directorspeak “impact” is always a bad thing but is used widely as it enables directors & CEOs to try and blame external problems beyond their control.  An “impact” never affects a company favourably – all favourable happenings are a conseqence of the sagacity of the Board and the CEO.

In 2014 UK like for like sales fell by a further 0.1%.

Now for the big impact. Full year results for the year to the end of March 2015 showed a 25% fall in group profit before tax, down from 23.8m to £18.4m.

Several years ago MJW imposed on its customers a minimum limit of 6 bottles per order. The Chief Executive pronounced at least twice that this minimum order nonsense gave MJW a compelling proposition. It seemed ridiculous then and it seems even more ridiculous now. But MJW stubbornly stuck to its policy, until today

Today management woke up to the facts of retail life and announced that forthwith the 6 bottle minimum order is abolished. Customer will now be graciously allowed to buy just one bottle at a time..

And the reasons MJW gives for this sudden volte face ? Firstly it will make the shopping experience simpler and easier. In that case why did they make it difficult in the first place. Secondly customers told MJW they wanted an end to the 6 bottle limit. It took all that time for the directors to realise how unpopular it was ??. Most importantly the company now admits that the limit was a barrier for customers.  So why did they keep the barrier in place for so long??

I suspect that the real reasons are that interim results are due in November. Last week a major shareholder, AXA Investment Managers S.A., reduced its holding to less than 5%. MJW may have some explaining to do. An apology could perhaps be too much to expect. An apology may have some “impact”.

Oh and surprise, surprise.  The share price has collapsed by nearly 25% since August

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