There’s Something Majestic About Naked Wines


Monday, 25 March: The hangover from a dovish US Fed last week persisted and the sell off in equity markets on Friday afternoon didn’t look to be eradicated as Asia markets led the declines as the new week began. The Nikkei in Japan led declines, falling 3%, while on the continent, major European indices followed suit as the health of the global economy weighed on investor sentiment. The FTSE 100 in London fell >0.8% early morning, although clawed back some of these losses over the course of the day (-0.4%) as the pound regained intra-day losses as PM May announced the meaningful vote in Parliament won’t be happening tomorrow. As far as Brexit uncertainty goes, the domestically focused FTSE 250 spent the day in the red, closing -1.05%. Major indices on Wall Street bucked the trend, opening higher, although these gains were lost at the time of writing as both the Dow Jones and S&P 500 both slip in to the red.

Investors’ flight to safety was all the more pronounced overnight as the yield on the 10-year Japanese government bond fell to a 31-month low of -0.095%. This was only a reflection of movement on Friday afternoon where German bund yields fell below zero (when investor confidence falls, bond prices are pushed higher and yields lower), while in the US, the gap between the 3-mont and 10-year Treasury yields inverted for the first time since 2007. Although not a true indicator, a key measure of investors’ economic expectations is the gap between the yields on short and long term Treasuries. To put in to further context, the 3 month yield has exceeded the 10-year yield ahead of every recession since 1975…

Back in the UK, Brexit noise aside, Majestic Wines has announced it is set to close stores and as part of a restructuring plan, be re-branded under Naked Wines, its online subscription division. Store closures are to be announced in the summer, alongside its full year results, but management’s plan is for the released capital from Majestic will be injected on accelerated growth in Naked Wines. In a further kick to investors, the dividend is set to be reviewed in the summer. Shares slumped c.12% mid-morning, a decline secured at the close.

If there’s one word that can describe Mike Ashley, it’s persistent (there may be others but that’s for a different blog). Despite Debenhams rejecting Sports Direct’s offer for its Danish division, Magasin du Nord on Friday, a deal that would have made Mr Ashley CEO of Debenhams (at least on a temporary basis), this morning Sports Direct has asked Debenhams’ board to reconsider the offer. Ashley claims the £100 purchase would help address Debenhams’ well publicised funding issues, but much like someone who isn’t interested in un-wanted new-found attention, Debenhams are now apparently not engaging with talks. Debenhams’ shares fell a further 2.6% (-45% on Friday) while Sports Direct slipped 1.3%.

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