Naked Wines makes a flying start to fiscal 2021 as online orders soar

Naked Wines has reported 81% year-on-year revenue growth during April and May as online orders spiked during the coronavirus lockdown.

The retailer had to stop accepting new customers and put a temporary hiatus on orders in March after demand for deliveries surged. It began accepting new customers again by the second week of April and sales soared during the first two months of fiscal 2021.

Naked made the revelation while presenting its full-year results this morning. Revenue increased 13.7% year-on-year to reach £202.9 million in the 12 months to March 31, 2020. Losses before tax narrowed by 46% to £5.4 million.

Total profit for the period was £8.2 million, reflecting discontinued operations’ profit after tax of £14.8 million. Naked Wines sold its Majestic Wine and Les Celliers de Calais businesses in a £95 million deal back in August 2019.

The reorganisation left Naked with net cash of £55 million on its balance sheet, compared to £15.5 million of net debt a year go.

Majestic bought online retailer Naked Wines in 2015 and installed Naked founder Rowan Gormley as group chief executive.

It continued to run both as separate businesses within the same group, but in 2019 year decided to rename the group Naked Wines plc to reflect an increased focus on online retailing, before then selling Majestic to private equity firm Fortress.

Gormley stepped down near the end of 2019, and chief operating officer Nick Devlin took the top job at the start of 2020.

Devlin said: “I’m delighted to report a strong set of results to conclude a year of transition for Naked Wines. We are ending the year with great momentum behind our growth plans and a simplified, well-capitalised online pureplay model that is ideally suited to the current climate.

“I would like to thank all our colleagues for their determination, flexibility, and commitment to our customers throughout the year, but especially over the past three months. I’m proud of the way they have allowed Naked to respond to the challenges posed initially by COVID-19 and subsequently by the sharp acceleration in growth we have seen since mid-March

“While predictions are harder than ever this year, I am excited about our plans for growth and confident that the mission of Naked to connect everyday wine drinkers to the world’s best winemakers is more relevant than ever. I believe the enduring impact of Covid-19 will be to accelerate trends towards direct, online models in categories like wine and that Naked is well positioned to deliver the combination of quality, value and community customers are looking for.”

Naked did not provide guidance for fiscal 2021 due to the volatile nature of trading conditions right now. However, the firm’s share price increased 4.6% when trading opened this morning.

Sales in the US increased 20% during the year to March 31. Naked also operates in Australia, but the UK remains its biggest market. It announced today that chief financial officer James Crawford will take over as managing director of its UK business.

Devlin added: “I am pleased to report that my first six months as chief executive has confirmed my belief in the opportunities for Naked to continue to grow and develop.

“The ‘Majestic era’ has, at times, been a challenging one for the business. It is clear to me that we have substantial opportunity to improve and further differentiate our core customer proposition and product range. To support that opportunity we have reinforced our global management team with the right mix of experienced talent to grow Naked to scale. With the clarity of focus of a simplified business and a strong team in place I am confident we will make substantial progress in the year ahead. The dividend of this transformation is that Naked has emerged stronger than ever. For the first time in its 12-year history we have a sustainable business, well capitalised for growth, with £54.7 million in cash at year end, and a clear and simple focus, to deliver on our growth potential, especially in the US.”