Naked Wines Plc has reported an 18% year-on-year decline in revenue at constant currency, to £132.3 million (€154.1 mllion), in the first half of its financial year to 2 October 2023.
This decline was mainly driven by a 16% reduction in repeat customer sales, which, in turn, was driven by a 15% decline in its member base.
Naked Wines incurred a loss before tax of £9.7 million (€11.3 million) in this period, while adjusted EBIT amounted to £2.2 million (€2.6 million) – down 44% at constant currency.
The company reduced investment in new customers to £9.2 million (€10.7 million) in the first half, from £11.7 million (€13.6 million), in the year-ago period.
"We are moving towards a period of sustained cash generation," commented Rowan Gormley, executive chairperson at Naked Wines. "We have taken out £3 million (€3.5 million) of cost with £10 million (€11.6 million) more to come and expect to generate £40-50 million of cash from inventory over the next 18 months. In addition, we have made good progress with testing an enhanced customer proposition to restore us to growth."
Analyst Comments
Naked Wines is moving in the right direction despite difficulties, analysts at Liberum said, adding that while the pace of change may not be swift enough, it needs to be balanced with inventory management and operational deleverage.
Last year, the company said it would continue to operate on a reduced cost base into full-year 2024 as its seeks to reshape its strategy and return to 'sustained, profitable growth'.
Other Highlights
Repeat customer sales declined 16% year on year at constant currency, to £121.8 million (€141.8 million), with sales retention rates dropping to 72% from 76% in the same period in the previous financial year.
Repeat customer contribution margins decreased from 28.4% to 25.0% despite the introduction of price increased.
The decline has been attributed to significant increase in fulfilment costs due to price inflation and underutilisation of committed capacity.
In November, Naked Wines slashed its annual revenue and profit forecasts and said CEO Nick Devlin will leave the online wine seller as it bleeds customers in the United States.
