Chapel Down cuts sales guidance; no longer for sale

(Sharecast News) - English wine maker Chapel Down downgraded its full-year sales guidance on Friday and said it was no longer up for sale.

Following a strategic review, the group said it had evaluated a number of opportunities and concluded there were no transactions that would create superior long-term shareholder value than Chapel Down remaining a stand-alone AIM-listed company.

As a result, it is no longer in an "offer period" and said it will "continue to lead the development and consolidation of the English wine industry and will only consider transactions that are value creating for our shareholders".

The news came alongside a trading update, in which the company said that while the performance of sparkling wines in the third quarter improved and Off-trade stockholdings have been reduced to normal levels, "there remains some ongoing pressure on rate of sale in the Off-trade".

Chapel Down said it expects continued double-digit sales growth for the year in the On-trade, Export and Direct to Consumer channels, and has "strong" consumer and customer promotional plans in place for Q4. However, it now expects the full-year net sales revenue to be a low, single digit decline on the previous year. This was down from previous guidance for single digit growth.

"This revenue impact, alongside the expected reduction in gross margin from a higher weighting in 2024 towards still wines, will result in a positive 'trading operating profit' for the full year, but this will be lower than in 2023," it said.

The company also said that its 2024 harvest will be of a high quality with particular similarities noted with the 2019 vintage, "but of a lower yield than the exceptional 2023 and the 5-year average harvests".

"Chapel Down has built a strong inventory of wine from previous vintages, and therefore future sales plans will not be impacted by stock availability," it added.

At 1405 BST, the shares were down 21% at 37.35p.