Naked Wines brings back founder Rowan Gormley as chairman

Naked Wines has appointed its founder as chairman to try to boost its growth as the online wine retailer revealed its first-quarter sales were below forecasts.

Rowan Gormley was initially brought back to Naked Wines, the company he founded in 2008, as an unpaid board advisor last September ahead of the launch of a new commercial strategy.

The following month, the company announced it would “turn to profit,” in part by reducing capital expenditures and inventory levels, though it admitted that this would affect short-term revenue and subscriber numbers.

On Tuesday, Naked Wines announced that sales in the first three months of the current fiscal year fell short of expectations, mainly due to lower volumes of new customers.

If current trends continue, it expects total annual sales of around £300m, which would be around £50m less than expected for the 12 months ending 3 April 2023.

Naked Wines said Gormley was “well placed” to help it win new customers faster on its way to “sustainable, profitable growth.”

The South African-born entrepreneur founded the company in 2008 after being dropped from another company he founded, Virgin Wines, when he attempted a failed management buyout of the retailer.

He came up with a unique business model where customers – known as “angels” – can subscribe to wine at discounted prices for a monthly fee and rate the products they buy on the company’s website.

Majestic Wine acquired the company for £70 million in 2019 and hired Gormley as CEO of the expanded company. He left that position three years ago when Majestic was bought by Fortress Investment Group.

Upon his return to Naked Wines, he replaces David Stead, who has served as Chairman since November 2017, having previously served as Chief Financial Officer of Dunelm and Chief Financial Officer for Boots the Chemists and Boots Healthcare.

Stead said he was “happy to hand over the chairmanship… as the company develops plans to deliver profitable growth over the long term.”

“In my time with the company, it has more than doubled in scale and recently we successfully transitioned from a period of exceptional growth during the pandemic to its current focus on profit and cash.”

Naked Wines also stated that the publication of its 2023 financial results, due July 6, would be delayed to give auditors more time to finalize their procedures.

Following this announcement, Naked Wines Stocks were down 10 percent on Tuesday to 89 pence, making them one of the biggest fallers on the AIM All-Share Index.

Naked Wines was a big winner in the pandemic, seeing its shares soar as sales soared. But the share price has plummeted nearly 90 percent in the past two years as the lifting of lockdown restrictions, the reopening of catering establishments and the cost of living crisis led to a major slowdown in online wine orders.

The retailer spent significant amounts marketing and expanding its wine inventory in anticipation of further growth, which subsequently failed to materialize, while costs were further exacerbated by supply chain disruption.