2017 Year in Review
2017 in short, we are past the tipping point:
- Past the tipping point financially. We are past the 8th year of compounding sales for Naked and the 8th quarter for Majestic, Profit in the second half of the year was up 51% on last year
- Past the tipping point operationally. Our test and learn strategy has delivered some clear winners and losers. The heavy lifting projects are on track and from now on the costs and risks of the transformation plan are coming down
- We remain confident about the medium term outlook. Despite some tough economic conditions, because we are eliminating low return costs without compromising on our transformation plan
2017 has been a mixed year, with a very strong second half redeeming a disappointing first half. Full year sales of £461.1m were up 11.4%. Reported Adjusted Profit before tax of £12.9m is slightly ahead of expectations. On an underlying basis Adjusted PBT was £10.8m, reflecting a very strong performance in the second half of the year.
Key factors driving this year’s performance were:
– Continued growth in like-for-like performance in Majestic Retail, where the business model of driving sales growth by focusing on customer loyalty has now delivered eight consecutive quarters of like-for-like sales growth of 5.7% and a total sales performance of 5.4% growth on a more streamlined store base.
– Strong growth from Naked Wines, especially in the exciting US and Australian markets.
– Finally I’m delighted to report Lay & Wheeler, our fine wine business, after years of languishing in the doldrums grew strongly at 36.2% and turned from a small profit into a meaningful contribution to the group bottom line.
Is our transformation plan working?
In a word, yes. There is still a lot to do, and not everything has worked as we wanted it to but the overall proposition is working. We now have eight consecutive quarters of like for like growth in Majestic Retail , eight years of the same in Naked Wines, and although 160 years old, Lay & Wheeler has been returned to double digit growth.
Sales are up 11.4% and adjusted EBIT in the second half was 51.0% higher year on year. This in turn is driven by the 7% growth in our customer base in Majestic Retail and 21% growth in our customer base at Naked Wines.
The best way to measure progress through our plan is to look at the 5 KPIs we report on each year:
|Group KPI||Definition||Majestic Retail||Naked Wines||Majestic Commercial||Lay & Wheeler|
|Repeat customer retention||% of repeat customers from 12 months ago that are still repeat customers, as measured from our customer databases||68% (1)|
|Product availability||% of targeted range available in stores/on websites as indicated by our inventory reporting||82%|
|Team retention||% of key staff (e.g. store managers) as of 12 months ago still working per payroll records||74%|
|Wine quality (Buy It Again ratings)||% of “Yes” scores in the last 12 months as recorded by websites/apps||91%|
|Proportion of 5* service ratings||% of service ratings scoring 5* in last two months as recorded by websites/apps/telephone feedback||87%|
(2) Lay & Wheeler has started acquiring new customers with higher attrition. The core customer base remains stable.