The chairman of Naked Wines apologizes to shareholders after the company suffered losses in a ‘tough’ year
- Naked Wines has made losses as it struggled to attract new customers
- Chairman and founder Rowan Gormley apologized to shareholders
The chairman of Naked Wines has apologized to shareholders after a ‘tough’ year in which the online wine seller made a loss.
New sales fell from £34m to £26.9m in the year to April 3, 2023 and Naked Wines posted a loss of £15m in 2023, compared to a profit of £2.9m last year.
Founder Rowan Gormley said: “Firstly, an apology. The entire board of Naked Wines regrets that your support and patience as shareholders, winemakers, Angels and employees has not been rewarded. We are all committed to fixing that.”
Corked: Naked Wines turned a loss after a difficult year in which it struggled to attract new customers
In July, the group appointed Gormley chairman to try to boost growth after first-quarter sales fell below expectations.
‘Make no mistake: trading conditions are tough. As you would expect, high inflation, higher taxes on alcohol and falling disposable incomes have put pressure on sales and costs.’
Shares in naked wines fell almost 10 percent to 63.25 pence on Tuesday morning and is down more than 50 percent this year.
Chief executive Nick Devlin said there had been a build-up of shares which had affected short-term liquidity and created additional costs that were impacting profits.
He also said the supply chain was operating below capacity, adding further costs. He said his focus now is on “delivering profitable growth.”
The company has made a further £7m of cost savings over the next twelve months, largely across its supply chain, and will reduce its wine purchasing commitments and sell excess wine on the bulk market.
Despite a disappointing set of results, Devlin said he believed Naked Wines could stabilize as “a significantly larger and significantly more profitable company than before the pandemic.”
Gormley reiterated the optimistic outlook, saying the wine retailer “does not have an overall sales problem… our existing customers are resilient despite the difficult circumstances.”
Existing customer churn has improved by two percent over the past year, but customer acquisition is proving to be a challenge.
Liberum analysts said there remains “a very significant risk that the group fails to attract sufficient new high-quality customers and that lower sales retention leads to further inventory write-downs.”
It added: ‘We continue to question Naked Wines’ ability to sustainably drive profitable growth as its 1.7x payback period remains insufficient. Our concern now is that the days of the stop-start growth strategy are returning.”
It lowered its target price to 50 cents.