Over the last year, Naked Wines has undergone a painful restructuring process, with measures to reduce costs, stock, and advertising spending in what it called a “pivot to profit.”
In December 2023, the company warned that it might not be able to pay its debts if it didn’t manage to make a turnaround work.
Now, it says the worst is over.
“The data still needs to come out before we can formally declare any victory, but the signals so far are very encouraging and definitely makes us excited about the future,” chief executive officer Rodrigo Maza told City A.M.
The company’s latest set of results laid bare the challenge ahead of the group.
Total sales fell by 18 per cent year on year to £290m in the 52 weeks ended 1 April 2024, while the company’s statutory loss before tax widened to £16.3m from £15m in 2023.
Losses rose as the company invested more in customer acquisition, but repeat business from existing customers fell.
Still, despite the financial pain, shareholders seem to be convinced.
Shares in the wine retailer rose by more than eight per cent on Wednesday after the yearly results were released.
The ‘end of an era and the start of a new one’
Naked Wines struggled to burn through excess stock and suffered from sustained high inflation and supply chain costs in key markets last year.
High pandemic demand as Brits drank from home also caused a huge build-up of stock when lockdowns eased.
According to Maza, the company became “very transactional” during this period and focused on deals rather than customers.
“That wasn’t Naked at the start. [Earlier] it was about the stories… about the product itself, what makes this wine special, the people that made that wine and how they’re inspiring that category itself,” Maza said.
“We’re going back to basics… To be able to facilitate that connection between customers and winemakers is an amazing opportunity and a critical part of what makes a difference [for growth],” he added.
Maza explained that personalisation and communication tests are being run around “probably the most important” growth factor, customer acquisition and retention, with early signs “positive.”
“We’re discovering how to engage existing and new customers, and we believe that by doing that, we will discover the best path back to growth,” he said.
No ‘material uncertainty’ for Naked Wines
In addition to revamping customer communications, Naked Wines has restructured its costs, inked a new £45m banking facility, and made progress—although not completely solved—it surplus inventory problem.
The group has turned its attention to selling wine in large quantities, such as barrels, as well as on a small scale to shift some stock.
“We have strong financial foundations in place that allow us to be fully focused on the future,” Maza said. “[The changes] have resulted in no material uncertainty, which is a very important message to lend.”
Along with its annual results, Naked Wines appointed Mind Gym’s Dominic Neary as its new CFO.
He brings “a ton” of experience, Maza said, with finance roles at Money Supermarket, Just Eat and Mind Gym.
“He’s very interested in building strong relationships with our commercial teams… and I think that’s always important, but that’s even more important for Naked given the challenges that we have,” Maza said.
Naked Wines faces a serious hill to get back to where it was even pre-pandemic, but its back-to-basics plan will hopefully resonate with customers.