Majestic Wine shares slide after profits warning

Majestic Wine has surprised markets with a profits warning after a slowdown in consumer spending took the fizz out of its sales. The news sent its shares tumbling nearly 20%.

Its chief executive, Steve Lewis, said: "Christmas went pretty well, but immediately Christmas finished the consumer went very quiet indeed. It took us by surprise. February was much quieter than we expected, and that's what's dampened profits."

The wine retailer said profit before tax would be flat for the year to the end of March. Despite a "satisfactory" Christmas with like-for-like sales growth of 2.8% and more customers splashing out on fine wines at more than £20 a bottle, the company now expects like-for-like sales to be flat for the year as a whole.

A tough 2015 lies ahead with subdued growth, Majestic also admitted. This is partly because it is pumping money into staff training, a new in-house web development team, a larger distribution centre in Hemel Hempstead in Hertfordshire and a new head office in Watford.

Majestic's buying director, Justin Apthorp, took advantage of the shares' plunge to spend £210,000 on 50,000 shares at 420p – giving him a total stake worth more than £2.2m.

Britain's big four supermarkets have also seen sales go into reverse in recent months as shoppers buy less or switch to discounters such as Aldi and Lidl. Sainsbury's became the latest group to report a slide in quarterly sales this week, ending nine years of consistent growth.

Latest market data from Nielsen indicated Majestic has held on to its market share of 4.1%, having benefited from the recession when staying at home became the new going out. Lewis said the trend towards people entertaining at home was set to continue.Majestic, which opened its 200th store in November, is still aiming to have 330 shops, which will take up to eight years to achieve.

Kate Calvert, an analyst at the house broker Investec, said: "Despite a solid Christmas performance, Majestic could not buck a material market slowdown."

She added: "Growth should resume in 2016. This is a disappointing setback in what is a well-run and highly cash generative business."