Naked Wines slashes growth targets and cuts spending in shake-up
The boss of the online wine retailer told shareholder that the company ‘made mistakes’ in pursuit of rapid growth.
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Your support makes all the difference.Naked Wines has slashed its sales guidance for the year after a slowdown in customer demand, and launched an overhaul of its board and spending plans.
The boss of the online wine retailer told shareholders that the company “made mistakes” in pursuit of rapid growth and will now prioritise profitability to ensure its sustainable future.
Nick Devlin said the business built up stock and grew its costs in anticipation of growth “which has not been delivered”.
“Today we are taking steps to reset our cost base and unwind inventory levels,” he said as the firm laid out a shake-up of its strategy.
Naked saw shares plunge earlier this year after its sales fell short of expectations amid pressure on customer spending.
On Thursday, the group said it now expects revenues to fall by between 4% and 9% over the current financial year, downgrading from previous targets of between 4% growth and a 4% decline.
Naked said it will see its cash reserves fall by almost half at the end of the current half-year to £22 million as it takes on stock as part of long-term commitments to winemakers.
However, the company said its new plan will “deliver substantial positive cash flow” from the second half of the year.
As part of the plan, it will cut marketing and administrative spending by £18 million.
It added that growth investment will be between £22 million and £24 million for the year, down from previous expectations of £41 million.
Naked said it has also “restructured” some of its teams to “create a leaner and more focused” organisation.
The restructuring resulted in 30 redundancies across the company, representing around 6% of its workforce.
The business said earnings over the half-year will be up on the previous year after the shake-up but highlighted that half-year profits will be knocked by a one-off £12 million hit due to the restructuring.
It added that this will be partially offset by a £4.8 million profit on the sale of the freehold of a property the group retained after selling off the Majestic store business in 2019.
As part of the overhaul, Naked also confirmed that chairman Darryl Rawlings will step down from the role immediately.
It added that David Stead, who has served as a director at the firm since 2017, will take over as chairman.
It added that the business is also in active talks with James Crawford to permanently become the group’s finance chief to support the new strategy.
Mr Devlin said: “As the founder and CEO of a direct-to-consumer, monthly subscription platform, Darryl has been a tremendous asset to us over the past 12 months.
“His focus on the fundamentals and unit economics have been helpful to us as we seek to create long-term sustainable value for our members, winemakers, team and shareholders.”