Naked Wines doubled its profits in the past six months as it marked strong progress against a turnaround plan launched earlier this year.
The wine merchant’s adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) doubled to £3.6m from £1.7m last year, largely due to a rigorous crackdown on marketing spend.
Alongside major cuts to its stock holding, this helped its cash pile grow by £8.2m to now stand at £31.1m.
While revenue was down 20% to £89.5m in the 26 weeks to 29 September, this was in line with previous guidance and reflects the company’s goal to refocus on sustainable profitability by recalibrating around a more engaged core base.
Naked Wines halved its spending on acquiring new customers in the past six months, contributing to a 64% fall in revenue from these customers who bought just £2.8m of wine during the period.
Repeat customers now make up over 95% of sales, although revenue here also fell 15%. The company’s retention rate – the percentage of members at the start of the financial year still buying at the end – was flat at 76%.
Naked Wines previously said revenue will return to growth by 2028, but argued boosting margin and cashflow outweighs the need to drive sales.
Wayne Brown, an analyst at Panmure Liberum, said this week’s results show Naked Wines’ “strategy is going better than planned”.
“The balance sheet is looking robust, and the disciplined operating model is coming together nicely.”
The business announced a £2m share buyback programme after its last full-year results in a bid to try and improve its share price.
Its stock has seen a turbulent year, almost doubling back in March when its turnaround plan was launched, before gradually sliding back in the months since. It’s now worth around £50m.
“Cash is building and if earnings momentum turns positive these shares should rally hard,” Brown said.
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