Proactive Investors - Naked Wines (LON:WINEW)’s full-year results for the 2023 financial year bore few surprises, with the subscription-based wine merchant battling a combination of high inflation, reduced US penetration and an oversupply of inventory.
As such, revenues dipped 8% on a comparable basis in the year to 3 April 2023, while the group became loss-making, posting losses before tax of £15 million compared to £2.9 million worth of profit in 2022.
New customer sales were down 29% while repeat customer sales were down 6%.
Strict cost-cutting measures and lower new customer investment meant Naked Wines achieved £16.3 million in underlying earnings (EBITDA) compared to £2 million in 2022.
Cash and available liquidity as of 3 April was a healthy £49.1 million.
Chief executive Nick Devlin was pragmatic about the results. "The trading environment is tough, but Naked remains highly resilient. We have taken decisive action and have met the key goals in our ‘pivot to profit’ strategy. Our focus now is on delivering profitable growth," he said.
“We recognise that the environment is likely to remain tough and are configuring the business to be profitable and cash-generative despite challenging conditions. A leaner and more focussed Naked will be best placed to deliver for our customers and winemakers. I believe we can emerge from these challenges a stronger business.”
Chairman Rowan Gormley offered a rallying call to stakeholders: “Make no mistake, trading conditions are tough… That's the bad news.
“The good news is that the business has proved to be very resilient even in these tough conditions. And the management team have taken the steps necessary to ensure that we don't just survive - we come through this as a leaner, tougher business, conditioned to do more with less and with some battle scars that will remind us of hard-learned lessons.”
Naked Wines expects to see losses between 8% and 12% in 2024, though an ongoing inventory unwinding programme and a cost-base reset are expected to deliver decent cash generation.
However, the group noted that first-quarter revenues started slower than expected, with sales to new customers down 41% and sales to repeat customers down 15%.