Majestic shares fell off a cliff this morning after the group announced plans to shut an undisclosed number of stores in a sweeping revamp of its business.

The price stood at 270.5p when trading closed on Friday and it decreased 11.1% to 241.5p by 10am on Monday.

The company will now rebrand as Naked Wines plc to reflect a growing focus on online sales going forward.

It purchased Naked Wines in a £70 million deal back in 2015 and installed the online retailer’s founder, Rowan Gormley, as chief executive, replacing Steve Lewis.

It followed a poor year for Majestic’s retail estate and Gormley was parachuted in to turn the business around.

Since then, online sales have continued to grow due to Naked Wines’ strong performance in the UK and the US, while retail sales at the Majestic estate have been less dynamic.

In a statement to the City, Majestic said almost 45% of its business now comes from online sales, with a further 20% from international sales.

It is now planning to close Majestic stores – it will reveal precisely how many in June – and ramp up its focus on Naked Wines.

There will be job losses, and this again will be revealed in June, when it presents its full year results.

It follows news of Oddbins being plunged into administration and provides further evidence that the role of the multiple specialist brick and mortar drinks retailer could well be dying out.

Gormley said: “It is clear that Naked Wines has the potential for strong sustainable growth, and we will deliver the best results for our shareholders, customers, people and suppliers by focusing all our energies on delivering that potential.

“We also believe that a transformed Majestic business does have the potential to be a long-term winner, but that we risk not maximising the potential of Naked if we try to do both.

“Where we have no choice but to close stores we will aim to minimise job losses by migration into Naked.”

He added that was on target to hit sales of £500m this year, and profits were also on track. Naked Wines sales have doubled since 2015 and they are expected to hit £175 million this year, while Majestic Wine also has a strong ecommerce offering.

As part of its plans, Majestic will increase customer investment in Naked by £6m per year, bringing the annual figure to about £26m.

Capital will be released from its Majestic Retail and Commercial operations through “a combination of customer migration to the Naked brand, asset sales and store closures”.

The statement from Gormley and the group lacks fine detail about the magnitude and timeframe of the restructuring.

Analysts at Liberum Capital called it a “drastic and unexpected change in strategy” as it cut its forecasts from full year 2020 onwards.

It added: “We know investment in Naked is to rise by £6 million in full year 2020 and then by more thereafter. If this investment can consistently be invested at a sustainable return on investment, then this is a good thing but we wait to know if the new digital channels the group is targeting are generating the same, or better, returns than vouchers and other routes that have been primarily used historically.

“The sale of Majestic, or site closures is a complete change and this could have material impacts to the balance sheet, and dividends – quite a change in tone and strategy since the capital market day last year. We now assume no final dividend for full year 2019 due to timing of the transformation programme but one should view the outer years at risk.”