Gormley returns as Naked Wines’ chairman to steer company amid slowing sales
Naked Wines has re-appointed its founder and former CEO Rowan Gormley as the company’s new chairman in a bid to steady the ship after slower than expected growth.
In a note to investors published yesterday, the online wine subscription company said the reappointment of Gormley would “support the development of plans to drive profitable growth”.
Gormley stepped down as a CEO of the company in January 2020, saying he was “a start-up guy” rather than the one to build the online business in the US. However, the company brought him back as an unpaid advisor in September 2022 to ‘represent the views of shareholders and advise the board accordingly’, a role that was only expected to last between two and three months.
Gormley will take over from chairman David Stead, who is leaving the board, with immediate effect, and the board is also bringing in Jack Pailing, the founder and portfolio manager at a UK-based investment company Colebrooke Partners, as an independent director.
It comes as the company issued a performance update, delaying the publication of annual results expected on Thursday. It noted that sales in the first quarter of the financial year were “below expectations” due to lower recruitment of new customers. “Extrapolating current trends through the remainder of the financial year would result in sales of around £300m,” it said.
The Group restated the current guidance for the financial year, which would return total revenue of around £350 million (which is flat on a reported basis, or -6% to -8% on a comparable basis), with EBIT expected at the higher end of the £15-18 million range, and cash of around £10 million (with total liquidity of £49 million, through its credit facility).
However, it said that the Group was “revising” its plans and would concentrate on “delivering sustainable, profitable growth and cash generation”.
“In light of the revisions to the Group’s plans the Auditors require additional time to complete their procedures,” it said.
In the announcement of Gormley’s return, it said that it was clear that to deliver the sustainable, profitable growth “the Group needs to recruit new customers at a higher rate”, and that Gormley was “well placed to support that goal.
Gormley said he was “excited to return to a much larger business that has an exciting future ahead” and thanked Stead and the team “for executing a challenging transition in a turbulent market”.
In his handover to Gormley, Stead noted that during his time with the Company, Naked Wines had more than doubled in scale and transitioned from a period of “exceptional growth during the pandemic, to the current focus on profit and cash”.
The company has had a tumultuous 12 months, with group chief executive Nick Devlin admitting that mistakes had been made “in pursuit of rapid growth”.
Its chief financial officer and the company director left the company following its shares plummeting by 44% in June last year, amid gloomy sales forecast on the back of supply chain issues caused by lack of availability weighing on new customer growth, and in October, it was forced to cut 6% of its workforce, making 30 staff members redundant in order to create a “leaner and more focused organisation”.
However, in January and then again in May, the company adjusted its earnings forecast “slightly above” its previous estimate, from £9-£13 million to £13-£17 million, raising hopes that the company was steering into calmer waters.