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Naked Wines’ Gormley: ‘We have to recognise we are a smaller company’

18 January 2024 By James Evison

Naked Wines has reported results in line with expectations for the third quarter with a 10% decline in year-on-year sales — but an improvement on the 18% fall in the first half of the financial year.

(Image: Naked Wines founder Rowan Gormley)

It comes as the chairman Rowan Gormley said in its financial update: “We have to recognise that we are a smaller company post-Covid and our cost base has to reflect this.”

Although the retailer reported that its customer base shrunk by 12%, it also reported that sales per repeat customer had grown by 2% and there was a 35% increase in new customers.

The latter news was a big rise, and was due to a 70% rise in investment for new customer acquisition, suggesting the move was paying off.

In terms of results, the firm is expecting its third quarter adjusted EBIT to be within the range of £3 to £5 million.

Cost-saving measures to the tune of £7m have been put in place, with the aim of achieving £30 to £33m-worth by the end of 2025.

It hopes the move will ensure the company’s potential for profit in the longer term, it said in its statement.

Painful but necessary

Naked Wines’ executive chairman Rowan Gormley, who returned to the company last July to steady the ship, said that he was satisfied with the company’s efforts to ensure a good peak trading season.

But he added sacrifices were still required including reducing the size of the board, with Melanie Allen departing as non-executive director.

Gormley added: “We have taken the painful but necessary decision to reduce SG&A costs by £7m per year, securing our profit potential. Sadly this means that we will be losing a number of valued colleagues who have been informed of our plans.”

“I remain committed to building a leaner and stronger Naked as we continue to address the challenging revenue trends. I’d like to thank the team, our suppliers and our shareholders for their patience and support as we continue to drive these changes,” stated Gormley.

The update follows Gormley also snapped up £7,700 worth of shares, significantly upping his stake in the firm, last month (December 2023). Following a spending spree on company shares on 15 December, Gormley now owns a 2.93% stake in Naked Wines.

He is not the only board member to have purchased a new load of shares. Non-executive director Jack Pailing has bought a £61k stake in the company to obtain a holding of 0.91%.

It follows on from Gormley and other senior board members buying up significant numbers of shares in early November to make up for the nosediving value of the online retailer after the company announced it was reducing its revenue expectations for full-year sales to be -12% to -16%.

Gormley’s return also saw him blaming former CEO Nick Devlin, who was dividing his time between the UK and US, for the latest set of plummeting figures.

“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,” said Gormley in November 2023.

“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… He goes with our best wishes.”

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