Shares in Naked Wines decreased 3.2% this morning after the shock announcement that founder Rowan Gormley will step down as chief executive after Christmas.
The decision comes amid widening losses for the online retailer, which recently sold Majestic Wine to private equity firm Fortress.
Naked delivered its H1 results this morning and it revealed that adjusted loss before tax widened from £2.1 million to £4.4 million in the six months to September 30, 2019.
Underlying revenue from continuing operations jumped 13.2% year-on-year to £87.5 million, but loss before tax widened to 21.5% and EBIT losses increased by £1 million to £5.7 million.
Total group figures for H1 rose 1.7% year-on-year to £233.1 million, but adjusted operating profit swung from a profit of £2.9 million last year to a loss of £1.6 million.
Gormley is now gearing up to hand the reins to chief operating officer Nick Devlin once the key Christmas trading period is out of the way.
Devlin has built up the firm’s US business, and Gormley said Naked is “in excellent hands”, while he shrugged off the disappointing figures, which were attributed to investment in new customer acquisition as the firm prepared to sell Majestic.
Gormley said: “We have built a solid foundation for growth. Naked Wines is now a pure-play online retailer, with a huge opportunity in the US wine market, and the resources to capitalise on that opportunity.
“Trading has been broadly on track in the first half,” he said. “Naked’s US business is well up on the key measures of investment, payback and sales. Consistent with our disciplined approach to investment we will slow the rate of increase of investment in new customers in the second half, due to sluggish performance in the UK and Australian markets.
“I want to thank our customers, people, winemakers and shareholders for their fantastic support over the last 10 years. I look forward to remaining a material shareholder, and a material customer.”
American investment firm Fortress wrapped up a £95 million deal to buy the Majestic retail chain, its Calais stores and its commercial arm in August.
Majestic bought Naked in 2015 and installed founder Rowan Gormley as group chief executive.
It continued to run both as separate businesses within the same group, but earlier this year it decided to rename the group Naked Wines plc to reflect an increased focus on online retailing.
It considered either rebranding the 190 Majestic stores as Naked Wines showrooms or closing the retail stores. After a consultation process, it decided to sell the entire Majestic business as a whole, and Fortress swooped in.
At the time, Naked was keen to stress that Gormley would continue to spearhead the Naked Wines project, which he founded in 2008.
“Naked has the greater potential for growth, and will deliver the best results for our shareholders, customers, people and suppliers over time,” he said. “Majestic Wine started life with a disruptive model that challenged the status quo. Now is the right time to do it again under the Naked brand. We’ll operate a much simpler business with one brand and one business model. We’re well-resourced, have a clear focus on growth, and we believe we can accelerate investment to build a bigger, more profitable business in the longer term.”
Yet Gormley will no longer be in the hot seat as the business strives to redefine itself following its split with Majestic.
Devlin joined as “head of continuous improvement” in May 2015 and he was appointed vice president marketing at Naked Wines’ US arm in March 2017. Seven months later he was promoted to president at Naked Wines USA, based in Napa, and he is now taking on the top job.
“Naked has an exciting opportunity ahead to build on its community that connects over half a million wine-drinkers with over 200 of the world’s leading independent winemakers,” he said. “I have been a part of that community for four years and overseen the rapid growth of the US operations for the past three.
“Naked has never been in better shape and we now have the internal capability, clarity of purpose and financial resources to take the business through its next chapter of growth. I am enormously excited to be given the opportunity to harness this platform and realise Naked’s full potential.”