TIDMWINE
RNS Number : 5649S
Naked Wines PLC
07 November 2023
7 November 2023
Naked Wines plc
("Naked Wines" or "Group")
Trading Update and Board Change
Naked Wines plc today announces:
-- Trading in the US market is weaker than anticipated
-- As a consequence, guidance for the current year is being reduced:
-- Revenue expectations reduced to -12% to -16% (previously -8% to -12%)
-- Adjusted EBIT expectations reduced to GBP2-6m (previously GBP8-12m)
-- Nick Devlin immediately standing down as CEO, Rowan Gormley
to become Executive Chairman while a successor is sought
Revised Guidance
Reflecting the outlook for the US business unit, our revised
view on headline FY24 metrics is as follows:
Revised Prior guidance FY23(2)
guidance(1)
Sales (52 week comparable,
constant FX) -12% to -16% -8% to -12% -8%
------------- --------------- ---------
Adjusted EBIT (52 week comparable) GBP2-6m GBP8-12m GBP16.3m
------------- --------------- ---------
Net cash (YE) ex. lease liabilities GBP0-15m GBP10-30m GBP10.3m
------------- --------------- ---------
1. This guidance is provided based on FX rates of 1 GBP = 1.24 USD and 1.74 AUD.
2. FY23 reported on a 52 week comparable basis
Further details will be disclosed as part of the Group's interim
results due to be published in mid-December.
Trading Context
The Group reported in September 2023 that FY24 had started
slower than expected, with Q1 revenue down 18% versus the prior
year. This reduction was a combination of sales to new customers
being 41% lower, reflecting that the comparable period was prior to
our pivot to profitability and reduction in new customer
investment; and sales to repeat customers being 15% lower,
reflecting the smaller customer base year on year.
While Q2 trading in the UK and Australian markets has been
broadly in line with the forecasts supporting prior guidance,
trading in the US during Q2 and October has been weaker than
anticipated. In particular, the repeat business has fallen short of
targeted revenues and contribution margins. H1 revenue trends by
market are shown below.
Revenue growth (%, cons H1'2024
fx)
UK -11%
--------
USA -20%
--------
Australia -19%
--------
Total -17%
--------
The Group ended H1 with GBP3m net cash and GBP45m of additional
liquidity available through its credit facility. The Group is
currently at its lowest point of forecast liquidity and continues
to anticipate converting excess inventory to cash over the next
12-18 months given its materially reduced inventory commitments. As
a result of the reduced revenue expectations in the US, the
previous destocking timeline has extended slightly.
The Group has met all borrowing covenants to date and is
projected to continue to meet all covenants under the revised
guidance set out above.
Board Change
As referenced in a separate announcement, Nick Devlin has agreed
with the Board that he will step down from the Board and his role
as CEO with immediate effect. Rowan Gormley, founder and Chairman,
will take the role of Executive Chairman on an interim basis until
a successor is appointed. Nick will continue in the role of
President, Naked Wines USA through the peak trading period before
leaving the Group fully. The process to appoint a permanent CEO
will commence immediately.
Rowan Gormley, Executive Chairman, commented:
"It is disappointing to be warning of underperformance against a
recent forecast. While trading in the UK and Australia has been in
line with the Board's expectations, current trading in the US has
fallen well behind, both in terms of sales and margin. Customer
attrition remains at historically low levels.
My view is that this shortfall is largely to do with execution,
which in turn is largely due to Nick Devlin splitting his time
across both the role of CEO and US President.
To resolve this situation Nick has agreed to step down as CEO
and I will move to Executive Chairman while we recruit a
replacement. Nick has agreed to help with the transition and stay
on as US President through peak.
I am sad to see Nick go, but his legacy remains. Naked Wines
revenue has grown 50% since he took the CEO role, and Nick leaves
with a lot of the hard turnaround work completed, including testing
some exciting improvements to our customer proposition, which we
are testing at scale right now. He goes with our best wishes."
For further information, please contact:
Naked Wines plc IR@nakedwines.com
Rowan Gormley, Executive Chairman
James Crawford, Chief Financial
Officer
Chris MacDonald
Investec (NOMAD & Joint Broker) Tel: 0207 597 5970
David Flin / Carlton Nelson
/ Ben Farrow
Jefferies (Joint Broker) Tel: 0207 029 8000
Ed Matthews / Harry le May /
Gill O'Driscoll
Instinctif (Financial PR) Tel: 07917 178 920 / 07931 598
Guy Scarborough / Damian Reece 593
About Naked Wines plc
Naked Wines connects everyday wine drinkers with the world's
best independent winemakers.
Why? Because we think it's a better deal for everyone. Talented
winemakers get the support, funding and freedom they need to make
the best wine they've ever made. The wine drinkers who support them
get much better wine at much better prices than traditional
retail.
It's a unique business model. Naked Wines customers commit to a
fixed prepayment each month which goes towards their next purchase.
Naked in turn funds the production costs for winemakers, generating
savings that are passed back to its customers. It creates a
virtuous circle that benefits both wine drinker and winemaker.
Our mission is to change the way the whole wine industry works
for the better. In the last financial year, we served more than
867,000 Angel members in the US, UK and Australia, making us a
leading player in the fast-growing direct-to-consumer wine
market.
Our customers (who we call Angel members) have direct access to
293 of the world's best independent winemakers making over 1,800
quality wines in 21 different countries. We collaborate with some
of the world's best independent winemakers like Matt Parish
(Beringer, Stags' Leap) and 8-time Winemaker of the Year Daryl
Groom (Penfolds Grange).
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END
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