Naked Wines swung to a loss of £15m in 2023, warning that it could fail to meet its financial commitments if a “combination” of factors affects its cash flow.
Founder Rowan Gormley apologised to shareholders as he explained that “high inflation, higher taxes on alcohol and falling disposable incomes” had put pressure on sales and costs and “resulted in our reporting a material uncertainty around our going concern”.
Naked Wines’ sales dropped to £26.9m from £34m in 2022 as the online wine specialist struggled to get through excess stock and sustained high inflation in key markets, hitting their supply chain costs.
The group said new customer investment fell 48% while repeat customer contribution stayed roughly flat.
Chief executive Nick Devlin said the focus is now 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.”
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The board said it had reviewed ‘a downside scenario’ of a 17% dip in sales for the year, concluding that the retailer should have enough borrowing covenants and sufficient liquidity to continue operating.
However, that would depend on uncertain factors, including more predictable trading, cooperation from suppliers and new borrowing.
If “a combination of these assumptions” results in a reduction in actual cash flows, Naked Wines may be unable to pay its debts.
“As such these factors give rise to a material uncertainty that may cast significant doubt over the going concern assumption of the financial statements,” the group said.
Last autumn, the retailer made around 6% of its workforce redundant after a failed growth strategy forced a restructuring and announced a shake-up of the business in a bid to cut costs after admitting it had “made mistakes” while pursuing “rapid growth”.
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