Naked Wines is "laying the foundation for a return to [...] sustained, profitable growth", its chief executive Nick Devlin has said, as the group reported its first-half results.
Total sales for the half-year period to 26 September stood at £166 million (€192.2 million), which was 3% lower on a constant currency basis, and 4% higher on a reported basis.
Adjusted EBITDA at the group (£4.6 million) was close to four times that of the previous year, the group noted, reflecting a 'pivot to profit' underway at the group.
'Reshaping Our Strategy'
"We announced in October our decisive plans to deliver profitability through reshaping our strategy," Devlin said. "In the half we took the first steps to reduce our costs and drive improvements to our liquidity, profitability and unit economics in the near-term."
The wine retailer noted that given the continuation of the uncertain economic outlook into next year, it plans to continue to operate on a reduced cost base into full-year 2024, with marketing costs also set to be lower.
Overall, it noted that it expects 'stronger profitability' in full-year 2024, as a result of its new strategy.
"The strength of our business model is clearly visible through underlying retention rates that remain unchanged to pre-pandemic levels, our success in realising price uplifts and improving payback levels," Devlin added.
"Currently, we are trading profitably in line with our expectations over the key holiday quarter and reconfirm our revised guidance for FY23 shared in October."
Analyst Viewpoint
Commenting on its performance, analyst Wayne Brown of Liberum said, "Naked Wines interims have come in as expected and re-affirm guidance and the shift in strategy as announced in October. The delivery of a positive EBIT will be encouraging but the very high inventory balance will remain a concern as we head into a recessionary environment.
"Management has provided the group with greater flexibility having renegotiated the covenant tests. However, the group will still consume cash as we move through the second half, but the annualisation of the new plan should support a strong outturn in FY24, for both profits and cash."
© 2022 European Supermarket Magazine – your source for the latest drinks news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
