Naked Wines shares drop 3% despite strong sales growth

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11 June, 2021

Naked Wines stock decreased by 3% this morning after the online retailer posted an annual pre-tax loss of £10.7 million.

The firm saw sales increase 68% to £340.2 million in the year to March 2021 after customer numbers soared by 53% during the pandemic.

Yet Naked Wines invested £50 million in new customer acquisition, a 113% year-on-year increase, which caused the pre-tax annual loss. It was almost double the pre-tax loss incurred in the previous financial year, and marginally ahead of analysts’ expectations.

Naked Wines is now the largest direct-to-consumer wine merchant in the United States after enjoying a 78% surge in sales there.

The U.S. market is now a strategic priority, and it believes investments made this year in bolstering infrastructure and acquiring new customers leave it well placed for future growth.

“It is clear to us that the pandemic has served to underscore the value of our business model in connecting winemakers and consumers directly and proven the opportunity before us,” said group chief executive Nick Devlin.

The retailer has targeted total sales of £355 million to £375 million for the year to March 2022. It will invest another £40 million to £50 million in acquiring new cvustomers. Repeat customer sales retention is expected to be “in the mid-70%s”, below a long-term average of 83%.

“Since inception, our mission at Naked has been simple – to disrupt the wine industry for the benefit of customers, our winemakers and our people,” said Devlin. “In FY21, we made significant progress towards this objective. “It is clear to us that the pandemic has served to underscore the value of our business model in connecting winemakers and consumers directly and proven the opportunity before us.”

Naked Wines stock remains up by more than 100% over the past 12 months.

“Stay-at-home trends have driven a step-change in volumes for the online wine sector, which Naked is capitalising on – with some encouraging signs of a permanent channel shift from offline to online,” Stifel analysts said in a note.

Source

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