Majestic Wine (LON:WINE) revealed on Monday that it would close stores amid plans to concentrate on its Naked Wines online division.

Shares in Majestic Wine dropped over 12% on the announcement.

Founded in 2008 by Rowan Gormley, Naked Wines was purchased by Majestic Wines in 2015 for £70 million.

Following the acquisition of Naked, the company pursued a transformation plan to broaden its sales outside of Britain, invest in customer relationships and increase its digital capability.

As a result of this, the company benefits from almost 45% online and over 20% international and it has identified significant growth potential driven by the US. The next phase of this transformation, the company said, is focusing on the significant growth opportunity that Naked offers.

Since the acquisition of Naked, it has built a 200 strong winemaker portfolio. This includes the makers of Grange, Tignanello, Solaia, Stags’ Leap Winery and Ruinart Champagne, producing over 1,000 wined in 18 different countries.

As the company moves towards the next phase of its evolution, it will announce a “Group Transformation Plan” in June 2019. Under this plan, the UK’s largest specialist wine retailer will focus on accelerating growth in Naked. Consequentially, the group will review the dividend in June 2019 in light of increased investment levels and transformation.

Additionally, the group transformation plan is expected to be funded by releasing capital from Majestic through “migrating customers and stores to the Naked brand”, the sale of assets and the closure of some of its 200 stores.

Finally, the change will come with a group rebrand to “Naked Wines plc”, reflecting its focus on a single brand and model.

“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,” Group Chief Executive Rowan Gormley commented on the announcement.

“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,” he said.

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

Though it has not specified how many stores are set to close, the group plans to minimize job losses.

Plans are expected to be fully revealed in June.

At 10:51 GMT Monday, shares in Majestic Wine plc (LON:WINE) were trading at -12.36%.