Hot small caps: Majestic Wine lower as interim profits fall

Shares in Majestic Wine fall 8.1 percent to 136 pence after the wine retailer reports a 25.5 percent fall in half-time pretax profit to 5.6 million pounds and says the key Christmas trading period will be challenging.

Evolution Securities said trading was worse than expected and that estimates for the full year are likely to come back by about 20 percent. It now looks for pretax profits of 13.5 million pounds for 2008/09, compared to 17.2 million previously. However, the broker is maintaining its "buy" recommendation for the shares based on fundamental valuations, although it expects the stock to fall in the short-term.