Majestic to stockpile 'Olympic swimming pool' of wine amid Brexit fears
The boss of UK's largest wines retailer says it is storing up an Olympic swimming pool worth of bottles as a contingency plan.
Thursday 22 November 2018 20:11, UK
Majestic Wine has revealed plans to bring in millions of pounds of extra bottles to guard against any disruption to supply caused by Brexit.
Chief executive Rowan Gormley told Sky's Ian King Live that the company would bring in "an entire Olympic swimming pool" worth of wine from Europe as a contingency against the risk of hold-ups at ports.
The company, which is the UK's largest specialist wines retailer, disclosed the plans at it published half-year results - which showed trading in its core market was "sluggish".
Majestic's Brexit preparations will see it bring in additional bottles to the value of up to £8m.
Mr Gormley said: "I think if there is likely to be any kind of issue it will be disruption in ports and we had a sort of semi-serious conversation about laying a wine pipeline under the sea, but in the end we thought we'd just get a bit more stock in and play safe."
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 said it would bring in the additional inventory in the weeks before 29 March.
Shares fell 14% in Thursday trading as investors reacted to its results for the six months to 1 October.
The figures showed that continued 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 £200k 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.
Mr Gormley 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."
The chief executive 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."