Close Menu
News

Is Naked Wines on the road to recovery?

Online wine club Naked Wines continues to turn its fortunes around with an adjusted earnings forecast “slightly above” its previous estimate, db can reveal.

Naked Wines has had a soap opera of plot twists during the last 12 months.

In June last year, shares in the online wine club plummeted by 44%, which saw its chief financial officer and then the company director swiftly jump ship in the months that followed.

In October, Naked was forced to cut 6% of its workforce, making 30 staff members redundant in order to create a “leaner and more focused organisation”.

Speaking to investors at the time, group chief executive Nick Devlin confessed that he recognised that “in pursuit of rapid growth we have made mistakes.”

Those mistakes, Devlin conceded, included buying inventory in 2021 and adding to Naked’s cost base “in anticipation of sustained faster growth which has not been delivered” and said that the company planned to “take steps to reset our cost base and unwind inventory levels.”

A slightly brighter picture was painted in January 2023 when Naked boosted its earnings forecast for the year to between £13-£17 million, up from £9-£13 million.

Now the company has upped its earnings forecast for a second time this year, bumping its estimate to “the top end or slightly above” its guided range of £15-£18 million, for the year ended 3 April 2023.

Naked Wines’ total revenue for the year was £350 million, with profit before tax expected to be £2-5 million, in line with expectations.

“FY23 has been a challenging year but we have made significant strategic progress with a foundation for sustainable profitable growth,” said Devlin.

“Our pivot to profit is on track, delivering profitability at the top end of our guidance. Our cost control actions have resulted in SG&A at the low end of our expectation, while destocking continues as planned. I’d like to thank the Naked team and our community of winemakers for their continued support.”

According to Devlin, Naked Wines enters FY24 “as a significantly larger and substantially more profitable business than we were pre-pandemic.”

He added that “as stated in January, we expect a modest revenue decline near-term, but the demand outlook is stabilising, and we have identified opportunities for material cost savings in our fulfilment operations in the medium-term. We continue to expect to generate cash in the second half of FY24 as stock levels reduce.”

Leave a Reply

Your email address will not be published. Required fields are marked *

It looks like you're in Asia, would you like to be redirected to the Drinks Business Asia edition?

Yes, take me to the Asia edition No