- Online wine retailer delivers growth thanks to repeat customers and subscriptions

- Guiding towards breakeven result this year

- New customer acquisition to decline further as retailer dials back on marketing

Online wine retailer and clear pandemic winner Naked Wines (WINE:AIM) delivered growth in a much tougher year to March 2022 as repeat customers and subscriptions supported trading.

However, the shares slumped by 32% to 195p after the company warned it expects to be breakeven this year at best. Growth is slowing and retention rates are slipping as consumers grapple with inflation, while new customer acquisition is set to decline further as the company dials back on marketing.


Online wine merchant Naked, which connects its subscribers with independent winemakers, swung from a £1.5 million loss to profits of £2 million at the adjusted earnings before interest and tax (EBIT) level last year as total sales bubbled up 5% year-on-year to £350.3 million.

The retailer reported solid repeat customer sales retention of 80%, though this was below the prior year’s 88%.

On a two-year basis, compared with pre-pandemic 2020, lockdown beneficiary Naked Wines’ sales were a palate-pleasing 78% ahead.

CEO Nick Devlin said: ‘In the past year we moderated investment responsibly as we navigated inflationary challenges. In that context, I’m pleased with the substantial growth in sales to repeat members supported by sales retention above our expectations for the year at 80% and our ability to deliver profitability.’


Devlin insisted Naked Wines is ‘well positioned to continue to grow amidst a changing consumer environment’.

Yet he warned the retailer ‘will not pursue growth at any cost, and our guidance is that we intend to trade the business at or around breakeven this year.’

Naked Wines is now guiding to total sales of between £345 million to £375 million this year, which implies a 4% year-on-year sales drop at the lower end of the range.

‘We have seen and continue to expect a measure of enduring inflationary pressure in all markets,’ cautioned Naked Wines, adding that ‘consumer sentiment has been impacted by inflation and the geopolitical environment, which we expect to continue to some measure.’

As Naked Wines shifts its UK business toward a more premium offering, the company expects to invest around £5 million less in acquiring new customers, which means sales in that segment will be ‘relatively flat’ year-on-year ‘as we reposition the customer base toward higher quality revenue’.


‘Naked Wines’ success in the first months of the pandemic is gradually trending towards being just a Covid bump,’ commented Liberum Capital, ‘with the company again struggling to attract quality new customers, in particular in the US, over the last 18 months.’

The broker cut its price target from 280p to 150p and is sticking with its bearish stance on Naked Wines, arguing that both financial risk and the risk to forecasts are high.


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Issue Date: 23 Jun 2022