Author Topic: WINE - Majestic Wine Plc  (Read 765 times)


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WINE - Majestic Wine Plc
« on: September 05, 2018, 08:23:41 AM »

Majestic Wine is a UK based wine specialist that operates in four segments:
1. Majestic Retail (55% sales / 53% Adj. EBIT) - UK wine retailer focused on customer experience. Transitioning to multi-channel retailer with control of the last mile delivery
2. Naked Wines (33% sales / 34% Adj. EBIT) - Funding platform for independent winemakers, who make exclusive wines at preferential prices. Subscription business model with direct marketing expertise and multi-year customer retention
3. Commercial (9% sales / 9% Adj. EBIT) - On-trade supplier that helps businesses to make their wine lists more profitable by offering national pricing and scale with local delivery and training
4. Lay & Wheeler (3% sales / 4% Adj. EBIT) - A specialist fine wine merchant


Market Cap: 290m
Net Debt: 8.4m
EV: c. 300m

EV/TTM EBIT: 16.5x
TTM FCF Yield: 8.6%
2018A ROCE: 12.4%


- Company operates in a large, fragmented market with a long runway and currently commands a small share of each market that it operates within (Retail - 10%; Naked - 1%)
- Employs a trial based approach to customer acquisition and has calculated that there is a 4.7x cash-on-cash return (15% IRR) for each 1 spent on customer acquisition
- Customers tend to be sticky given the excellent level of customer service and value proposition
- At their latest investor day, they have reiterated the potential for customer acquisition spend and guided to the fact that EBIT will be depressed over the next 1-2 years as revenues are re-directed to acquiring new customers rather than returned to shareholders
- Business is run by serial entrepreneur Rowan Gormley (founded Virgin Money and Naked Wines). The executives have a large part of their wealth in the business and are choosing to focus on the long-term growth opportunity
- Business has delevered post the Majestic/Naked merger and the balance sheet is in sound condition


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Re: WINE - Majestic Wine Plc
« Reply #1 on: September 10, 2018, 12:42:02 PM »
I really like CEO Rowan Gormley.  Anyone interested should look through his presentations and shareholder letters.  I think he is a long-term thinker who is very focused on driving LT shareholder value.


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Re: WINE - Majestic Wine Plc
« Reply #2 on: September 11, 2018, 02:45:15 AM »
Agreed, he seems to be focused on creating value rather than taking rents.

Would be keen to hear thoughts on their current plan. They appear confident that they are onto something with their customer acquisition strategy and the potential returns. If you can get 15% CAGR on customer acquisition and maintain your overheads relatively flat, the economics should take care of themselves.