// Naked Wines fell into the red in its half year as it progressed with its turnaround
// The retailer’s UK managing director James Crawford has returned to the group CFO role
Naked Wines swings to a half-year loss as its UK boss James Crawford becomes group CFO.
The wine specialist, which is currently “reshaping its strategy” as it focuses on “sustained, profitable growth”, posted a £200,000 loss at a pre-tax level in the half to 26 September. It made a £1.3 million profit the year before.
The retailer said the loss was due to “inventory provisions”.
Naked Wines slashed its sales guidance for the year in October and made around 6% of its workforce redundant following a failed growth strategy.
The retailer had built up stock and grew its costs in anticipation of growth “which has not been delivered”.
Over the half year, sales edged up 4% to £166 million, however this was a 3% fall on a constant currency basis.
The retailer said the short-term hit was due to the strategic changes it had made.
Naked Wines’ chief executive Nick Devlin said the short-term changes had reduced its sales trajectory and “the full impact of this will be seen in the coming periods”.
He explained: “In the half we took the first steps to reduce our costs and drive improvements to our liquidity, profitability and unit economics in the near-term.
“Ultimately, we are laying the foundation for a return to our ambition of sustained, profitable growth, whilst also providing ourselves with greater resilience.”
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Naked Wines UK managing director James Crawford will return to the post of group chief financial officer with immediate effect.
He held the post until November 2020 when he took the UK managing director role.
Crawford, who has been at Naked for almost 9 years, had been carrying out the CFO role on an interim basis alongside his UK duties since July this year, however, will relinquish his MD post. He will also hold an executive director role at the business.
Resilient retention rates
Despite falling into the red, Naked Wines’ CEO Devlin heralded the strength of its business model and pointed to its resilient retention rates that are unchanged against pre-pandemic levels.
Repeat sales were up 3% to £148.4 million. However, new sales dipped 8% to £13.4 million.
The retailer added that it was trading in line with expectations over the key Christmas quarter.
However, Naked Wines said it would continue to “operate on a reduced cost base” in its next financial year.
It intends to keep marketing costs substantially lower than last year, unless it sees a “marked improvement in customer recruitment economics”.
The wine specialist expects its strategy changes to deliver stronger profitability in its 2024 financial year.
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