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Impairment charges prevented Naked Wines from returning to profit in the year to April.
Statutory losses before tax widened by 9%, to £16.3m, as the struggling wine merchant recorded non-cash goodwill impairment and inventory provision charges of £12.2m in the 52 weeks ended 1 April 2024.
The charges related primarily to the group’s US and Australian business segments “as a result of reduced future trading expectations” in these markets, said CFO James Crawford.
The group was making “real progress turning things round” and was in “much better shape than it was a year ago” insisted non-executive chairman Rowan Gormley, however.
“This is not immediately apparent from the trading results which, although in line with expectations, reflect the company we were, rather than the company we are starting to become,” he added.
Revenues at the embattled business also continued to slide, falling 18% year on year to £290m.
This was attributed to a reduction in the number of the company’s active “angel” subscribers, leading to a 13% decline in sales to repeat customers on a 52-week basis, Crawford said.
Adjusted EBIT was £5m, down 71% from £14.9m on a 52-week comparable basis (£17.4m on an adjusted 53-week basis). This was down to a 21% fall in gross profits to £55m, driven by “the challenge of the business shrinking”, according to Crawford.
Fixed warehousing costs were “being amortised over fewer orders” while “ongoing high stock levels” led to high storage costs and the need for “aggressive discounting” to shift excess inventory, he added.
There was also a 17% uplift in investment as the group sought to acquire new customers.
“Over the past few months, we have made significant strides by strengthening our financial foundations, embedding resilient management practices, and importantly, crystallising a robust customer proposition,” said new CEO Rodrigo Maza. “This proposition not only drives our mission to enable independently-minded wine drinkers to enjoy great wine without the guesswork but ultimately ensures long-term engagement and a competitive advantage.”
Maza, appointed to the role of full-time CEO at Naked in April a little over six months after joining as its UK MD, said the business had began FY25 with “robust foundations” in place, having last month secured additional financing of $60m (£47m) via a new five-year credit line with PNC Bank.
The group said it was forecasting its FY25 revenues to be in the £240m-£270m range.
Adjusted EBIT, meanwhile, would be between -£2m and £6m, accounting for further inventory liquidation losses, it added.
Naked Wines shares were up 5.7%, to 53.9p in early trading.
Morning update
Separately, Naked Wines announced the appointment of Dominic Neary as its chief financial officer to replace James Crawford. Previously, Neary was CFO at Mind Gym where he “helped return the business to profitability, whilst building scalable global operations”, Naked said. Prior to this, he spent 10 years in various financial positions at Reckitt Benckiser, culminating in the role of regional finance director of its North American pharmaceuticals business.
Neary will join Naked on 11 November 2024 and will also be appointed to its board.
The FTSE 100 is near-flat at 8,345.61pts.
Early risers include the aforementioned Naked Wines, and Just Eat, which climbed 1.6% to 1,120p.
Private label personal care specialist McBride fell 3.1%, to 127p, while Marstons dipped 1.4% to 42.4p
Fever-Tree Drinks, meanwhile, fell 1.1% to 891.5p.
Yesterday in the City
The FTSE 100 finished the day up 0.3% to 8,353.48pts.
Naked Wines rival Virgin Wines was among the day’s biggest risers, finishing up 3.5% to 45p. Greencore Group, meanwhile rose 1.88% to 184.2p.
Among the biggest fallers were Just Eat, which finished down 2.5% to 1,102p and global nutrition group and cheese maker Glanbia, which fell 2.3% to €15.63.
Shares in several high street retailers including JD Sports and Burberry were also hit, after a gloomy survey by the Confederation of British Industry. B&M European Value Retail was down 1.7%, to 444.9p.
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