Naked Wines has assured investors it is moving towards ‘a period of sustained cash generation’ after sales slumped and losses widened in the first half.
The online wine retailer saw total revenues slide 20 per cent year-on-year for the 26 weeks to 2 October, to £132.3million, while pre-tax losses from £200,000 last year.
In efforts to compensate for the decline, the group’s boss told shareholders it had slashed £3million in costs and has plans to cut another £10million from its bottom line.
The online wine retailer reported that total revenue fell by 20 per cent year-on-year for the 26 weeks to 2 October, to £132.3million
The company also revealed that its general and administrative costs were down 27 per cent year-on-year.
As a result, Naked Wines expects to deliver between £40million and £50million of cash in inventory over the next 18 months.
Rowan Gormley, executive chairman of Naked Wines, said: ‘We are moving towards a period of sustained cash generation.
‘We have taken out £3 million of cost with £10 million more to come and expect to generate £40-50 million of cash from inventory over the next 18 months.
‘In addition we have made good progress with testing an enhanced customer proposition to restore us to growth. I want to thank our people, our winemakers and our customers for their support and reiterate our determination to make sure that they are rewarded for it.’
In November, Naked Wines cut its annual forecasts and announced its chief executive was leaving the business.
Chief executive Nick Devlin agreed to step down ‘with immediate effect’, with founder and chairman Gormley taking on the role of executive chairman on an interim basis until a successor is found.
The group’s share price has fallen over 70 per cent in the last year.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘Naked Wines has seen its shares rise, despite total revenues in the 26 weeks to 2 October falling 20% to £132.3m, and losses have widened.
‘Potentially more worrying is the double digit decline in repeat revenues, which shows that what should be loyal customers are dropping off. This is a combination of belt-tightening and fierce competition in the online-wine-world.
‘The group’s struggled post-pandemic after the demand surges seen in lockdowns, and issues including attracting new customers and inventory levels have caused problems.
‘The group’s seeing losses from both pipes of the revenue funnel, with both existing and new customers proving fickle and elusive, which makes for an uphill battle. Cost cutting is helping the bottom line, but not enough and it can’t go on forever – a meaningful increase in customer activity will be needed sooner or later. The positive share price bump is likely more a sigh of relief that things weren’t worse.’
Naked Wine shares rose by 8.72 per cent to 46.75p in Friday morning trading.
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