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A “very strong” second half was not enough to keep Majestic WINE (WINE) out of the red as the wine retailer recorded pre-tax losses of £1.5m.

CEO Rowan Gormley said the group was now “past the tipping point”, financially and operationally.

Costs associated with Gormley’s transformation plans dragged down adjusted pre-tax profits 29% on an underlying basis to £10.9m.

The group fell from an overall profit of £4.7m in the previous year to a loss of £1.5m as it continued to be hit by non-cash charges related to the Naked Wines acquisition, one-off costs and revaluation of its foreign currency positions.

Majestic issued a profits warning in September after Naked Wines hit difficulties in the US, with a failed direct mail campaign leading to higher costs and fewer customers than expected.

However, the business said today a strong performance in the second half saw adjusted EBIT up 51%.

Revenues in the 53 weeks ended 3 April 2017 came in at £461.1m, up 11.4% on an underlying 52-week basis. The growth was driven by 12% growth in the customer base to 852,000 active customers.

Majestic Retail delivered its eight consecutive quarter of like-for-like sales growth, up 5.7%.

Lay & Wheeler, the fine wine business, grew sales by 36.2% and turned from a small profit into a “meaningful contribution” to the group bottom line after “years of languishing in the doldrums”.

Gormley said: “We are past the tipping point, both financially and operationally. Financially, Adjusted EBIT in the second half of the year is up 51% on prior year. Operationally, we are through the most risky and cost intensive phase of our transformation plan.

“Together these mean we have a business that is better able to weather the uncertain trading environment, with a sustainable growth model, the big strategic questions answered, a better paid and rewarded workforce and more effective systems and processes.”

Gormley said Majestic was moving out of the “test and learn phase” of the plan and into the “roll out” phase, which comes with less risk and lower investment.

However, he warned that the uncertainty around Brexit was likely to have a long-term impact on demand and could hit its operation in Calais. The fall in the value of the pound has hurt margins at the retailer as costs of goods increased.

“In short, we are in much better shape than we were two years ago - and we need to be, because UK retail is likely to be in for a rough ride, with downward pressure on demand, due to falling household incomes and upward pressure on prices,” Gormley said.

“However, it is not all doom and gloom. We are moving into a lower risk and lower investment phase of our transformation plan, which means that despite anticipating tougher times ahead, we feel able to reiterate our sales target of £500m in 2019 and affirm current profit expectations.”

Separately, chairman Phil Wrigley informed the board that he will retire and step down from the Board at the AGM in August after 17 years with the business.

Gormley added: “Phil has made a tremendous contribution to the future of Majestic, through his wisdom, decades of retailing experience and wicked sense of humour. He will be sorely missed. We wish him a very happy and well deserved retirement.”

Wrigley said: “It has been a privilege for me to be a part of such an important time in Majestic’s history.”

Shares in Majestic nudged up 0.1% to 385p as markets opened.

Morning update

PZ Cussons (PZC) said its performance in the year ended 31 May 2017 had been in line with expectations. In a trading update, the multinational added the washing and bathing division in the UK had been “robust” with renovation and innovation continuing to drive good performance across Imperial Leather, Carex and Original Source despite competitive market conditions. The Imperial Leather range relaunched during the year, with other product launches for the Carex and Original Source brands.

In the beauty division, Sanctuary, St Tropez, Charles Worthington and Fudge all performed well, the group said.

Difficulties remained in Africa as availability of US dollars at the interbank rate in Nigeria remained low resulting in the need to continue accessing the secondary market, despite liquidity improving during the second half.

“All business units across personal care, home care, electricals and food & nutrition have continued to trade relatively well in an environment where the consumer is under significant inflationary pressure,” PZ Cussons said. “The group’s diverse product range with product offerings at all price points has ensured that market shares are held or grown across the brand portfolio.”

The group added overall that the “strength and agility” of its brand portfolio is underpinning solid performance in all regions and new product launches are performing well.

“Tight control of costs together with further margin improvement initiatives are successfully countering ongoing raw material and exchange rate volatility. The group’s balance sheet remains strong and well placed to pursue new opportunities as they arise.”

PZ Cussons shares are down 0.4% to 342.2p so far.

Sports nutrition firm Science in Sport (SIS) has been named the official sports nutrition supplier to British Triathlon. The business will supply British triathletes across both the Olympic and Paralympic National Lottery funded programmes, including Tom Bishop, Alistair and Jonathan Brownlee, Lucy Hall and Alison Patrick.

In addition to the supplier deal with the British triathlon team, SiS said it would engage with a growing audience of over 80,000 triathletes across the event portfolio and the British Triathlon databases.

CEO Stephen Moon said: “We are delighted to have signed this agreement with the British Triathlon in the lead up to Tokyo 2020 and are looking forward to supporting not only the elite teams, but also the substantial audience of amateur triathlon competitors.

“We are now official nutrition partner to four national governing bodies around the world and this is testament to the quality of our science and innovation capability, product superiority and our best in class approach to banned substance testing.”

Shares in the group are down 1.5% to 84.3p.

Yesterday in the City

WH Smith (SMWH) jumped 2.7% to 1,791p despite it reporting sluggish growth in a trading update. Like-for-like sales were flat in the 15 weeks to 1 June as travel sales rose but the high street slumped.

British American Tobacco (BAT) was another riser, up 0.6% to 5,446p, as the tobacco firm said the weak pound would boost its profits. First half earnings will be boosted by 14% currency tailwind, BAT said.

Reckitt Benckiser (RB) fell just 0.2% to 7,865p after rating agency Moody’s cut the long-term credit rating of the consumer giant by two notches following the approval of its $17.9bn acquisition of US baby milk group Mead Johnson.

Majestic Wine jumped 1.8% to 384.8 ahead of this morning’s finals.

Greencore (GNC), Associated British Foods (ABF) and Marks & Spencer (MKS) were all among the risers, up 2.5% to 248.4p, 1.8% to 3,022p and 1.7% to 369.3p.

Ocado (OCDO) was also back on up the after some heavy losses, climbing 1.4% to 278.9p.

TATE & Lyle (TATE) was down 0.8% to 729p and B&M European Value Retail (BME) was down 0.6% to 349.8p.

The FTSE 100 fell 0.4% to 7,474.40 points as the index was hit by gains in the pound ahead of expected US Fed rate rise.