Majestic Wine to close stores and rebrand as Naked
Majestic Wine has announced plans to revamp its business by closing some of its 200 stores and concentrating on its online Naked Wines division.
The change will also see the company being renamed Naked Wines.
More details of the store closures - and any job losses - will be given in June along with its full-year results.
Naked Wines was founded by entrepreneur Rowan Gormley in 2008. It was bought by Majestic in 2015 for £70m and Mr Gormley was given the top job.
Naked is a subscription business that signs up customers for regular payments, and the plan is to expand the operation by releasing capital from Majestic.
In its statement, Majestic said almost 45% of its business came from online with a further 20% from international sales.
Mr Gormley said: "It is clear that Naked Wines has the potential for strong sustainable growth, and we will deliver the best results for our shareholders, customers, people and suppliers by focusing all our energies on delivering that potential.
"We also believe that a transformed Majestic business does have the potential to be a long-term winner, but that we risk not maximising the potential of Naked if we try to do both.
"Where we have no choice but to close stores we will aim to minimise job losses by migration into Naked."
The company added it was on target to hit sales of £500m this year, and profits were also on track.
It said Naked continued to perform well and regular customer payments were expected to increase by 10-15% this financial year.
The new plan includes raising the amount it spends on attracting new customers to Naked from £20m currently to £26m by next year.
As a result of its planned increase in investment, Majestic said it would review its dividend in June this year.
Shares in Majestic fell 8% at the start of trading.
Analysts at Liberum called the move "a drastic and unexpected change in strategy".
Rebranding 'a real shame'
By Jamie Goode, Wineanorak.com
Majestic Wine is an enduring and well-loved brand and it is a real shame to think it is being replaced by Naked.
It was a category-buster in its day - they took out-of-town sites, with parking, that weren't too expensive, and you were forced to buy wine in bulk, in multiples of 12, for licensing reasons.
Another good thing about the business from a taste point of view was they used to buy wines directly from producers - a winery would make a wine and Majestic would buy it.
In the past few years, under Rowan Gormley it has shifted, moving for the first time into selling wines under its own label.
That's good for margin but has taken the shine off the brand.
Mr Gormley clearly sees the future - and a better margin - with his own creation, Naked Wines.
But while Naked does have some some interesting wines, it has some very ordinary ones too.