Naked Wines has given investors another boost with a strategic plan to return the business to revenue growth over the next five years.
The online wine retailer is undergoing a transformation under new CEO Rodrigo Maza, having finally begun to stem losses at the end of last year.
While revenues are set to continue declining in the short term, Naked Wines’ new strategy is targeting 5% to 10% growth by 2030. It argued focusing on boosting margin and cash flow outweighed the need to drive sales.
It is aiming to deliver a boost to profits with a target for earnings before interest, taxes, depreciation, and amortisation to reach £10m to £15m in the short term.
This would come from recalibrating the business around high-quality, profitable core members, the business said, alongside £23m in newly identified annual cost savings.
Naked Wines said this should result in £100m of net cash by 2030, which will be redistributed to shareholders. Around £75m of this already sits on the balance sheet, with the business holding about £33m in cash plus a further £40m in excess inventory.
Its share price is up 16% this morning after the announcement.
“A year ago, I made a commitment to deliver real value to all our stakeholders,” said CEO Rodrigo Maza. “We now have a powerful plan that fulfills that promise, as we deliver on FY25 guidance even in the face of challenging market conditions.”
However, there remains concerns over Naked’s business model, which takes regular payments from customers to fund independent winemakers, from which it then buys wine at a discount.
Last month, Richard Bernstein, an investment manager at Crystal Amber, said he feared Naked’s 700,000 “angel” customers did not recognise the risks in the business and what the company presented as “net cash” was in fact a liability.
The company has “more front than Selfridges,” Bernstein told The Times. He suggested that rather than the £33m in net cash the company claims it holds, after deducting customer deposits, it actually owes around £40m.
Yet others remain more excited. Wayne Brown, an analyst at Panmure Liberum, said “investors need to pay attention – Naked Wines has turned a corner”.
“With cash much greater than the current market cap of £45m we see huge upside to the share price.”
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