// Naked Wines has announced a shake-up of the business after cutting 6% of its workforce
// Chairman Darryl Rawlings has stepped down effective immediately with David Stead replacing him
Naked Wines has slashed its sales guidance for the year and made around 6% of its workforce redundant after a failed growth strategy forced a restructuring.
The online wine retailer has also announced a shake-up of the business in a bid to cut costs after admitting it had “made mistakes” while pursuing “rapid growth.”
Nick Devlin said the business built up stock and grew its costs in anticipation of growth “which has not been delivered”.
“Today we are taking steps to reset our cost base and unwind inventory levels,” he said as the business laid out a shake-up of its strategy.
Chairman Darryl Rawlings has stepped down effective immediately and is also set to step down as a member of the board at the end of the month, with David Stead taking on the role of chairman immediately.
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The group said it now expects revenues to fall by between 4% and 9% over the current financial year, downgrading from previous targets of between 4% growth and a 4% decline.
Naked Wines said earnings over the half-year will be up on the previous year after the shake-up but highlighted that half-year profits will be knocked by a one-off £12 million hit due to the restructuring.
It said it will see its cash reserves fall by almost half at the end of the current half-year to £22 million as it takes on stock as part of long-term commitments to winemakers.
Although, it said the new plan will “deliver substantial positive cash flow” from the second half of the year.
The retailer said it would also slash marketing investment by £18 million as it was “not delivering satisfactory returns”.
Low consumer confidence and high levels of supply chain inflation had resulted in an underwhelming performance for the retailer in recent months which had seen sales soar during the pandemic.
Devlin: “As the founder and CEO of a direct-to-consumer, monthly subscription platform, Darryl has been a tremendous asset to us over the past 12 months.
“His focus on the fundamentals and unit economics have been helpful to us as we seek to create long-term sustainable value for our members, winemakers, team and shareholders.”
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