MJW.L Share News (MJW)

There was no champagne-popping Christmas celebrations for Majestic Wine, as a disappointing update saw sales less than half last year's.Despite the wine retailer giving up a small portion of profit margin in order to increase promotional activty, total UK store sales for the 10 weeks to 5 January 2015, were up 3.7% and like-for-like (LFL) UK store sales growth was 1.1%.This compared badly with LFL sales of 2.8% in the first half of the current financial year and 2.8% in the same period a year ago, and means LFL UK store sales growth for the first 40 weeks of the financial year has slipped to 2.0%.Chief executive Steve Lewis said the difficult trading and "more promotional" pricing environment was expected to continue "throughout much of 2015".He added: "Majestic delivered like-for-like sales growth of 1.1% in a difficult Christmas trading period characterised by promotional activity and we are now focused on delivering our final quarter's trading."The promotional activity by rival retailers led the AIM-listed outfit to invest 50 basis points of gross margin to ensure its prices remained competitive and attractive to customers.Analyst Mark Photiades at Canaccord suggested Majestic's commercial operations had performed better than retail and that initiatives designed to improve the Majestic customer proposition and ultimately drive future sales growth were progressing but "the benefits are taking time to come through".In light of the year to date performance and the additional margin investment, he has cut full year 2015 pre-tax profit forecasts by 4% to £22m from £23m previously, a decline of 7.3% on 2014, and with the market likely to remain challenging has cut 2016 profit forecast by 6% to £23.2m from £24.8m previously.Investec downgraded its own 2015 profit forecasts by 6% to £22m even though it admitted sales comparables were easier for the rest of the year, and cut 2016 expectations by 8%.