Naked Wines shares plummet 20% as supply chain crunch and stalling sales put the brakes on its lockdown boom
- Full-year sales forecasts cut from £355m-£375m previously to £340m-£355m
- Total sales rose by just 1% on the same time last year to £159.3m with £1m profit
- Naked Wines says it anticipates coming month to be ‘a record holiday season’
Naked Wines shares plunged 20 per cent this morning after the upmarket online wine seller reported a significant slowdown in its lockdown sales boom.
The firm cited ‘headwinds from global supply chain disruption’ weighing on product ‘availability for customers’, as it cut full-year sales forecasts from previous guidance of £355million-£375million to £340million-£355million.
That stands in stark contrast to the rapid growth through lockdown of Naked Wines, which connects its Angel members with winemakers to help fund their endeavours and has built up a successful subscription business.
Shares plummeted as new customer growth slowed and sales forecasts were cut
Having been buoyed by the closure of hospitality venues in previous reporting periods, Naked Wines saw a decline in new customer sales as ‘wine consumers sought in-person experiences [after] emerging from Covid-19 lockdowns’.
Total sales for the half-year rose by just 1 per cent on the same time last year to £159.3million.
However, the firm delivered a profit for the first time of £1million, having lost £8.1million at the same time last year and £5.4million during the same period two years ago.
Naked Wines had been a major beneficiary of the pandemic as Britons snapped up more expensive bottles online during lockdowns.
In contrast with today’s lacklustre figures, sales rose 68 per cent to £340.2million in the year to 31 March, as it grew its number of active customers by 53 per cent to a total of 886,000.
The firm’s pandemic performance is reflected in its share price, rising 330 per cent from 205p in March 2020 to a peak of 888p in April 2021. Naked Wine shares were trading above 850p in September, but had been on the slide since before today’s big slump.
Naked Wine’s pandemic performance saw its shares soar before today’s slump
Naked Wine’s performance in the six months to the end of September still represents significant growth on the same period two years ago, with sales 82 per cent higher and gross profits up 99 per cent.
Going forward, the wine seller said it is ‘well positioned for what we anticipate will be our largest holiday season’, adding that it is ‘mindful of the challenges in restoring availability over the last 12 months and continued supply chain disruption’.
CEO Nick Devlin: ‘We are well stocked and prepared for what we anticipate to be a record holiday season’
Naked Wines therefore intends to run the business with higher inventory balances over the medium-term ‘to preserve availability for customers and ensure we do not constrain our growth potential’.
Group chief executive Nick Devlin said: ‘I’m delighted by the progress we have made so far this year in further strengthening our winemaker line up and customer proposition.
‘We are now serving a global community of 947,000 members – an increase of 25 per cent over the last year – reflecting sustained consumer desire for an alternative to traditional wine distribution.
‘I’d like to thank all our teams for their hard work in a challenging supply environment for ensuring we are well stocked and prepared for what we anticipate to be a record holiday season.
‘We are focused on delivering an incredible experience for our members and on continuing to invest to grow Naked Wines and connect more wine drinkers to the world’s best independent winemakers.’
Shares were 19.6 per cent down during late morning trading to 543p.
Analysts at Peel Hunt maintained their hold rating for Naked Wines but lowered their target from 825p to 750p.
They said: ‘Naked Wines’ interims showed some good signs of market share gains and that it is not immune to changing markets and supply chain issues.
‘There is still a very interesting model being developed here but the momentum in sales forecasts has stalled.
‘Therefore, we are not unhappy that we brought our recommendation to a neutral one earlier this year. Good company, but perhaps one that is having a short period of growing pains.’