Majestic Wine has reported a significant leap in full-year sales for the financial year ending 28 March 2016, but the acquisition of eCommerce retailer, Naked Wines, has driven down profits.

The retailer reported its first positive performance in the last four years, with a 41.3% increase in full-year sales to £402.1 million, but the acquisition of Naked Wines a year ago caused profits to fall 74.5% to £4.7 million.

Majestic has just completed year one of a three-year transformation programme, with encouraging results, including a 4.8% like-for-like sales growth, while Naked Wines reported £104.3 million in sales (£102.5 million of this was post-acquisition). Naked Wines also revealed its first profit of £1 million, thanks to repeat customer business.

The retailer said it is on track to deliver £500 million in sales by 2019 now it has a new senior management team in place.

Commenting on the results, Rowan Gormley, group chief executive, said: "We have taken the first step on a long journey – it was a good start but it is just the first step. Early signs are that the plan is starting to work. Strong sales figures reflect the hard work being done on the ground by the whole team. The management re-organisation is now complete, I am delighted with the teams we have in place across the Group. At Naked Wines we had a belter of a year – breaking through the £100 million sales barrier and delivering a maiden profit."

Speaking to Essential Retail this morning, John Colley, MD of Majestic Wine, said the company is still in the early stages of its investment programme, but has seen a vast improvement in in-store customer experience, by simplifying its offer and removing complicated discounts.

"We've generally tidied up the customer journey in the stores and we've begun revamping our older shops."

Colley said the retailer has also improved its supply chain. "Last year we weren't even tracking availability," he said. "And we're seeing improvement in the shops, helping customers, investing in people, process as well as replenishment systems."

Many of its improvements have come from its £70 million acquisition of Naked Wines and the e-tailer's agile working influence on Majestic. The group's IT team is now based in Naked's HQ in Norwich working on the company's new backbone infrastructure. Colley said there have been no significant technology releases as yet, but over the next 12 months there will be a focus on replatforming onto new in-house IT systems.

One of the first significant IT releases will enable Majestic's click & collect service before Christmas. Naked Wine customers can go into a Majestic store to collect their online orders, but Majestic's online customers cannot.

"We also think there's an element of business that we're not getting, where customers want next day and we can't fulfil it," he explained.

"It's a key part of development into multichannel over the next couple of years," said Colley, noting how its legacy systems have prevented the roll out of the service so far.

Majestic intends to keep Naked Wines as a separate business and brand. Colley said Naked's customers are a different type of customer and love the Naked business ethics, this even makes it difficult to upsell to Naked click & collect customers when they come into Majestic stores to pick up their wine.

"We've got a lot of things going on all at the same time," added Colley. "And even mentioning IT and supply chain in one sentence, that's enough to make most retailers loose sleep. We've got that going on while the market is undoubtedly competitive."