A beneficiary of the inflection in consumer demand for online wine as a result of the pandemic, Naked Wines’ share price has more than doubled since the March lockdown to trade at 469p.
Nevertheless, the ambitious Devlin clearly feels they remain good value, having snapped up (12 Aug) 4,342 shares at 456p for a £19,800 outlay.
‘Following the purchase, Mr. Devlin’s beneficial interest in the company and that of persons closely associated with him will be 49,592 ordinary shares representing approximately 0.07% of the issued share capital of the company,’ explained today’s statement to the stock market.
For the uninitiated, Naked Wines connects everyday wine drinkers with the world’s best independent winemakers. Its business model sees customers, which it calls ‘Angels’, commit to a fixed prepayment each month which goes towards their next purchase.
In turn, Naked Wines funds the production costs for winemakers, generating savings that are passed back to its customers and creating a virtuous circle that benefits wine drinker and winemaker alike.
Over the past year or so, Naked Wines has served nearly 600,000 individual customers in the US, UK and Australia. This makes it a leading player in the fast-growing direct-to-consumer wine market and explains why Devlin was so keen to raise his stake in the AIM-traded company.
Results for the year to March 2020 were marginally ahead of expectations, with sales up 14% to £203 million and the loss before tax reduced by 46% to £5.4 million, as Naked Wines saw a Covid-19-driven sales acceleration in the final weeks of the year.
Flush with £55 million net cash, having previously sold the Majestic Wine and Lay & Wheeler businesses, Naked Wines also flagged a tasty start to the new financial year with sales up 81% in the first two months.
INFLECTION POINT REACHED
In its more recent annual general meeting update (6 Aug), Naked Wines assured the market it continued to trade strongly. Total sales for July were up 73% year-on-year, taking sales growth for the first four months of the financial year to a palate-pleasing 76%.
This reflected strong rates of new customer growth as well as strong repeat business, with new customers recruited during the pandemic coming back for more wine, although management is aware the heightened levels of new customers and repeat purchase frequency could reduce as the world re-opens.
‘The evidence we are seeing across our markets is consistent with our view that Covid-19 has served as an inflection point for the online wine market, with Naked uniquely placed to benefit from that,’ insisted Devlin.
‘We have the balance sheet strength and operational agility to enable Naked to continue to focus on ways to accelerate growth and take advantage of the opportunities presented by the new and evolving consumer landscape.’