Majestic Wine plunges after the suspension of the dividend | Business

Majestic Wine's shares fell sharply after the company suspended the dividend and warned that the sale of its retail chain could slip in 2020.

Managing Director Rowan Gormley said the sales talks were in an "advanced stage", with "multiple bidders" interesting at the 200-store chain. However, if an agreement was not signed before the end of the summer, the company, also owner of Naked Wines, would stop the process and restart it at the beginning of the year.

"We are at a crossroads in the history of society," said Gormley. "We made the difficult but important decision to focus on Naked and leave Majestic. If we are not able to complete the process during the summer, in time for the Christmas and New Year holiday season, we will continue to manage both businesses independently one year. on the other, and look to restart the process in 2020. "

It is believed that the list of potential bidders for Majestic Wine includes US hedge funds Elliott Advisors, UK-based private equity firm OpCapita and Fortress Investment Group, owned by Japan's SoftBank.

The update occurred when Majestic fell to an annual pre-tax loss of £ 8.5m on sales of £ 506m, after reducing the value of its stores by £ 11m and increasing investment in the company. Naked Wines.

The company, which is considering renaming itself Naked Wines, says the website offers growth prospects superior to those of High Street Arm, which is currently its largest business, with a turnover of £ 268 million . Sales at Naked Wine increased 14.5%, while underlying sales in Majestic stores increased 1.5% as of April 1st.

Shares fell by more than 11% at one point, before closing down 9% to 290p, following the decision to suspend the final dividend to the detriment of investors, although the company announced a special payment of equivalent value after cashing the sale of Majestic. .

GlobalData badyst James Yacoub said the company's decision to sell its physical stores was likely to "alienate its core clientele." He said: "By moving your business online, there is probably little that sets it apart from countless other online retailers."