Foundations laid to focus on profitable growth and cash generation

It has been a challenging year for Naked Wines. Ultimately though I believe it is one in which we have undertaken important work to stabilise the business alongside work to lay the foundations for a future in which we deliver on our ambition of profitable growth. 

In October 2022 we took decisive action and laid out a plan to “pivot to profit”. That plan had three main elements:

  1. Secure our credit facility to provide funding while we undertook a change of path;
  2. Demonstrate profitability; and
  3. Develop a path to sustainable, profitable growth.

Our focus over most of FY23 has been primarily to ensure Naked was on a more secure footing and demonstrate the underlying profitability of the business. However, despite much progress the trading environment remains challenging moving into FY24 and as a result we are undertaking further actions to ensure we fully right-size our stock levels and cost base. 

We have much more to do. We have ambitious goals and in some areas our testing has not yet unlocked the progress we need. Equally we recognise the consumer environment remains uncertain and the global wine industry is challenged with over-supply.

However, we are ready and motivated for the challenges ahead. We are absolutely committed to returning Naked to profitable growth and recognise the need for decisive action and tough near-term decisions to get us there. We have a core business and membership base that even in a tough environment remains incredibly robust. That platform creates options for Naked – and as a team we are determined to use that to establish Naked’s long-term potential in a way which creates clear value for all our stakeholders.

Read more in our CEO’s review

Overview

Full year highlights: 

  • Total sales of £354m, +1% year-on-year (down 8% on a 52 week comparable basis1) 
  • Adjusted EBIT of £17.4m, or £16.3m on a 52 week comparable basis (FY22: £2.0m), ahead of guidance (£13-17m) due to lower new customer investment 
  • Statutory loss before tax of -£15.0m (FY22: profit before tax £2.9m) driven by non-cash goodwill impairment and inventory provision charges 
  • Inventory in line with prior guidance, £166m at year end (FY22: £142m), net £10.3m provision (FY22: £nil) 
  • Net cash (ex. lease liabilities) of £10.3m (FY22: £39.8m), total available liquidity (cash and credit facility) of £49.1m (FY22: £39.8m) 

Strategic highlights 

  • Credit facility covenants revised to accommodate the destocking process 
  • £10m p.a. of further cost savings identified, enhancing customers lifetime value and profitability 
  • Foundations laid to make profitability sustainable, growth investment opportunities developing 
  • Expect material cash generation across H2 of FY24 and FY25 as excess stock is unwound 

Notes:

  1. FY23: 53 weeks versus 52 weeks in the previous financial year: All financial and non-financial information in this document relates to our 53 week financial period ended 3 April 2023, unless otherwise stated. Within this announcement and the Chairman’s statement, the Chief Executive’s review and the Financial review, we provide comparable 52 week constant currency financial information to facilitate comparison with our prior financial period, 52 weeks ended 28 March 2022. For reference, we call this 52 week constant currency measure ‘52 week comparable’ (or simply comparable) where it is referred to in this document. See the reconciliation of reported results to 52 week comparable figures in the APM section at the end of this announcement. Please note that whilst the 53 week results from which this statement has been extracted have been audited, the 52 week comparable numbers in the underlying financial statements are unaudited.

Read More on Naked Wines

Hear More From Our Team Here

See our Digital Content