Naked Wines has finally started to stem its losses after a tough few years in what investors are hoping are the first glimpses of a long-awaited turnaround.
Under CEO Rodrigo Maza, Naked has pivoted away from attracting customers through heavy discounting with vouchers and is instead looking to “facilitate that connection between customers and winemakers,” according to Maza.
While revenue was down 10.2% in the 13 weeks to 30 December, this was in line with expectations and an improvement from the half year mark when it was down over 14%.
Meanwhile, revenue per member rose by 2% reflecting “improvements in order frequency and average order value”, according to Naked. Declining order frequency has been a key driver of Naked’s struggles over recent years.
Read more: How ‘customer-centric’ CEO Rodrigo Maza plans to revive Naked Wines
“Elements of the business continue to move in the right direction,” said Panmure Liberum analyst Wayne Brown.
“There could be a very profitable business here,” he added. “While the strategy won’t deliver a linear recovery, the pieces of the puzzle are becoming visible.”
Naked’s net cash flow has improved in line with expectations to £30m, up from £4m this time last year. Brown said the sustainability of this was key. “If management can provide confidence on this at the March update, then the shares should start to recover rapidly.”
Naked’s reduction of its inventory size is a key driver of cash generation. It is now down to £116m, a £47m reduction on the year before.
CEO Maza said the results were “solid and featured improving trends and positive signals from KPIs supported by our strategic initiatives and testing plan.”
He added: “We are tracking in line with full year expectations, and look forward to providing a further update in March, including a plan focused on shareholder value creation
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