Shares in Majestic Wine have fallen sharply after the company suspended its dividend and warned that the sale of its retail chain could slip into 2020.
The chief executive, Rowan Gormley, said sale talks were at an “advanced stage”, with “multiple bidders” interested in the 200-store chain. However, if a deal was not signed by the summer’s end, the company, which also owns Naked Wines, would halt the process and restart it in the new year.
“We are at a crossroads in the company’s history,” Gormley said. “We have taken the difficult but important decision to focus on Naked and exit from Majestic. If we are unable to complete the process over the summer, in time for the important Christmas and new year season, we will continue to run the two businesses independently of each other and look to restart the process in 2020.”
The list of potential bidders for Majestic Wine is thought to include US hedge fund Elliott Advisors, the British private equity firm OpCapita and Fortress Investment Group, which is owned by Japan’s SoftBank.
The update came as Majestic fell to an annual pre-tax loss of £8.5m on sales of £506m after writing down the value of its stores by £11m and stepping up investment in the Naked Wines venture.
The company, which plans to rename itself Naked Wines, says the website has greater growth prospects than the high street arm, which is currently its largest business, with sales of £268m. Sales at Naked Wine were up 14.5%, while underlying sales at Majestic stores were up 1.5% in the year to 1 April.
The shares fell more than 11% at one point before closing down 9% at 290p as the decision to suspend the final dividend unnerved investors, although the company said a special payout of equivalent value would be made after it had banked the cash from selling Majestic.
GlobalData analyst James Yacoub said the company’s decision to sell its physical stores risked “alienating its core customer base”. He said: “By moving its business online, there is arguably little to differentiate it from any of the other countless online alcohol retailers.”
