Shares in Naked Wines slumped six per cent today as reports about a refinancing deal with debt advisers appeared to give investors jitters.
The troubled business has already seen its share price fall by over a third in the last year, leaving it with a market capitalisation of around £50m.
Back in December the loss making firm said that it was working with an adviser to explore options for a “future credit facility which would place fewer constraints on the business”.
Over the weekend, Sky News appeared to name the restructuring arm as Interpath Advisory.
A spokesperson for Naked Wines, told City A.M: “Naked Wines disclosed this information at its half year results released in December 2023.
“It announced then that it was working with an advisor to explore options for a future credit facility which places fewer constraints on the business.”
City A.M has contacted Interpath Advisory for a comment.
The development has dragged the shortcomings of the publicly listed wine retailer back into the spotlight.
In January, it said 50 jobs would be cut including two board member roles in an effort to shore up costs amid a period of poor sales.
Last year it posted a series of profit warnings and swung to a £15m full-year loss. The company also warned it could go bust as cash reserves have dwindled.
Sales are expected to fall between 12 per cent and 16 per cent during the current financial year,
Daniel Coatsworth, investment analyst, at AJ Bell, said today’s share price slip is the market’s way of saying it is “worried that trading remains poor and its borrowing costs could jump dramatically”.
“The business is loss-making and lenders will rate it as higher risk,” he added.
“The company is going through a period of change and refinancing debt is a logical part of this process, particularly if it is able to secure more flexible terms. But that comes at a cost.”
It comes just one month after Naked Wines appointed former MD Rodrigo Maza as chief executive.
He replaced Nick Devlin who stepped down, citing a conflict in his roles leading both the UK and US operations for his departure.
He has remained as president of Naked Wines in the US.
“Naked Wines is among the growing number of companies realising that the boom in trading during Covid was unsustainable,” Coatsworth added.
“Lots of people loaded up on cases of wine during lockdown but this tailwind has since faded away. With freedom to go to the pub or a bar whenever you want, fewer people are stocking up on wine at home.”
He explained: “There is also the fact that interest rates remain high and the cost of living has shot up, which means more consumers are watching every penny.”
“The idea of buying a nice case of wine firmly sits on the ‘non-essentials’ list, which means there are other priorities for someone’s cash.”