Shares in beleaguered Naked Wines bounced back this week as it pledged to refocus on its bottom line, admitting it “made mistakes” in its pursuit of rapid growth.

Announcing the result of its strategic review on Thursday, Naked said it had “reshaped” its strategic plans “to deliver profitability at a sustainable level”. In what it called a “pivot to profit”, it has reduced growth targets from £345m-£375m in 2023 to £340m-£360m, representing a sales drop of between 9% and 4%, while adjusted EBIT will move from break even to £9m-£13m.

This will be achieved by reducing marketing spend failing to deliver satisfactory returns and restructuring staffing levels to create a “leaner and more focused organisation”. It will also destock its inventory over the next 18 months, having taken on too much stock to support its growth ambitions.

Crucially, Naked has also renegotiated its banking facilities, resulting in £64m of available liquidity. It had breached previous banking covenants, which were based on “repeat customer contribution” levels, causing concern over the ongoing financial health of the business.

Now a replacement covenant will be based on adjusted EBITDA, which provides “considerable headroom”.

Meanwhile, Darryl Rawlings will step down as chairman of the board, replaced by David Stead. It is also in discussions with former CFO James Crawford to resume the role on a permanent basis.

CEO Nick Devlin said: “We recognise that in pursuit of rapid growth we have made mistakes… While the operating environment remains challenging, with low consumer confidence and high levels of supply chain inflation, we have taken steps to reconfigure Naked appropriately.”

Naked said as a result of the actions taken as part of the strategic review, it is now trading profitably and in line with revised guidance – with adjusted EBIT expected to be significantly ahead of last year £4 before one-off restructuring costs of £12m.

Naked shares spiked 34% to 126.5p by Thursday lunchtime – albeit still below the level they were trading at before it announced the emergency strategic review in September, and remaining down more than 80% year on year.

Liberum welcomed the “sensible” review, adding: “We welcome the return of the old CFO James Crawford who is clearly making sensible decisions and the renegotiated covenants removes short term concerns.”

But a more cautious Peel Hunt said: “The update should allay some fears about the covenants, but the top-line growth story is over… This was always about the top line and growth there is set to stall. The shares hold little interest to us.”

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