The chairman of Naked Wines has apologised to shareholders after a ‘tough’ year in which the online wine seller swung to a loss.
New sales dropped from £34million to £26.9million in the year to 3 April 2023 and Naked Wines posted a loss of £15million in 2023, compared to a profit of £2.9million last year.
Founder Rowan Gormley said: ‘Firstly, an apology. The whole board of Naked Wines regret that your support and patience as shareholders, winemakers, Angels and employees has not been rewarded. We are all determined to remedy that.’
Corked: Naked Wines swung to a loss after a tough year in which it struggled to acquire new customers
In July, the group appointed Gormley as chairman to try and boost growth after its first-quarter sales came in below forecasts.
‘Make no mistake, trading conditions are tough. As you would expect, high inflation, higher taxes on alcohol and falling disposable incomes has put pressure on sales and costs.’
Shares in Naked Wines plummeted nearly 10 per cent to 63.25p on Tuesday morning and are down over 50 per cent year-to-date.
Chief executive Nick Devlin said there had been a buildup of stock which had impacted short-term liquidity and created extra costs that have had an effect on profits.
He also said that the supply chain was operating below capacity and adding further costs. He said his focus is now on ‘delivering profitable growth’.
It has found a further £7million of cost savings in the next 12 months, largely in its supply chain, and will reduce its wine purchasing commitments as well as sell excess wine on the bulk market.
Despite a disappointing set of results, Devlin said he believed Naked Wines could stabilise as ‘a substantially larger, and considerably more profitable, business than it was pre-pandemic.’
Gormley reiterated the optimistic outlook and said the wine seller does ‘not have a general sales problem… our existing customers are resilient despite the tough conditions.’
The attrition rate of existing customers improved by two per cent in the last year, instead customer acquisition is proving challenging.
Liberum analysts said there ‘remains a very significant risk that the group fails to attract enough quality new customers and lower sales retention leads to further inventory write-offs.’
It added: ‘We continue to question Naked Wines’ ability to sustainably drive profitable growth as the 1.7x payback remains insufficient. Our concern now is that the days of the stop-start growth strategy return.’
It slashed its target price to 50p.
