REG - Naked Wines PLC - Trading Update and Board Change

Naked WinesAnnouncement

07/11/2023 07:00

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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 £2-6m (previously £8-12m)

●    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 guidance(1)  Prior guidance  FY23(2)
 Sales (52 week comparable, constant FX)  -12% to -16%         -8% to -12%     -8%
 Adjusted EBIT (52 week comparable)       £2-6m                £8-12m          £16.3m
 Net cash (YE) ex. lease liabilities      £0-15m               £10-30m         £10.3m

 

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 fx)  H1'2024
 UK                           -11%
 USA                          -20%
 Australia                    -19%
 Total                        -17%

 

The Group ended H1 with £3m net cash and £45m 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 598 593

 Guy Scarborough / Damian Reece

 

 

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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