It's not been the best couple of days for retail chief executives. Yesterday morning saw the departure of House of Fraser boss John King and after eight years and Monsoon's John Browett also stepped down. This morning it’s the turn of Majestic Wine's chief executive Steve Lewis, who has been with the company for 29 years since joining as a graduate trainee, but will now leave with immediate effect.
His downfall comes after the company had a difficult Christmas period, in which it was forced to cut prices to compete with extra promotions from supermarkets. Though that delivered 1.1% like-for-like sales growth, the effect on margins clearly didn’t go down well. Nigel Alldritt, currently Majestic's finance director, will take on Lewis's responsibilities in the interim until they find a replacement.
'[Lewis] took the helm in 2008 in the midst of the credit crunch and subsequent recession and successfully steered the business through very difficult times,' said Majestic chairman Phil Wrigley. 'He leaves the business today in good shape, with sales up 41% and profit up 42% during his time as Chief Executive, and with the business well positioned for the next phase of its development.'
Those are glowing words, but Majestic's share price today won’t be a pretty site for Lewis. Though it dipped initially after news of his departure broke, at time of writing it was up almost 5% to 346.35p. Ouch.
Credit: Yahoo Finance
Ditching Lewis is unlikely to be a magic bullet for Majestic though. In January he said he expected that the 'competitive pricing environment will continue throughout much of 2015,' and with the supermarkets fighting to retain market share and Aldi and Lidl on the rise, that’s likely to be the case. The German discounters in particular have been making a lot of noise about making quality wines more affordable.
Majestic occupies a particular sector of the market. Its service and range are higher quality and more extensive (and expensive) than that of a typical supermarket wine aisle, but less premium than a small specialist wine merchant with extremely well-trained sommeliers. As supermarkets continue to lead the way on price, Lewis’s replacement will need to find a new edge to bring customers through the doors.