The founder of Naked Wines, who returned as chair earlier this year, has issued an apology to the online retailer’s shareholders, after the company recorded a £15 million loss for the year ending April 3.
Rowan Gormley said in a letter along with the FY23 results announcement, that trading conditions are tough.
“High inflation, higher taxes on alcohol and falling disposable incomes has put pressure on sales and costs,” he said. “Combine that with multi-year production cycles for wine and falling new customer acquisition and you have a perfect storm, driving inventory build-up and pressure on cash, which has resulted in our reporting a material uncertainty around our going concern.”
The company recorded sales of £354 million, +1% on the 53-week period (down 8% on a 52 week comparable basis).
Elsewhere Naked Wines said the first quarter of its FY24 financial year has started “slower than expected”, with Q1 sales down 18% compared to the prior year period.
Naked said the reduction is a combination of sales to new customers being 41% lower, the comparable period being prior to its “pivot to profitability” strategy change, and reduction in new customer investment. The retailer also pointed to sales to repeat customers being 15% lower.
The statement continued: “With revenue below our initial plan, we are marginally behind our destocking plans but have taken steps to further reduce future purchase commitments while continuing to manage costs tightly.”
Nick Devlin, group chief executive, said Naked remains resilient.
“We have taken decisive action and have met the key goals in our ‘pivot to profit’ strategy,” he said. “Our focus now is on delivering profitable growth. We recognise that the environment is likely to remain tough and are configuring the business to be profitable and cash generative despite challenging conditions. A leaner and more focussed Naked will be best placed to deliver for our customers and winemakers. I believe we can emerge from these challenges a stronger business.”