Naked Wines (WINE) H2 2024 earnings summary

Executive summary

• Significant progress made in stabilizing the business, with substantial cost reductions, improved inventory management, and a new CEO and CFO to address acquisition challenges and drive the next phase.

• FY24 focused on profitable growth, cost rightsizing, and cash realization from inventory, with a shift to restoring growth through customer acquisition, personalization, and retention initiatives.

• Revenue declined 13% year-over-year to £290.4m, with a 17% drop in active Angels and adjusted EBIT down 66% to £5.0m.

• Cash and liquidity improved, with net cash at £19.6m (+92% YoY), supported by a new long-term funding facility.

• Customer recruitment remains challenging, but repeat customer sales KPIs are steady and attrition rates are stable.

Financial highlights

• Revenue declined 13% year-over-year to £288.5m, with a slower decline in H2 (9%) compared to H1 (18%).

• Adjusted EBIT was £5 million, down 66% from the prior year; repeat customer contribution margin declined 210bps to 24.7%.

• Statutory loss reported, with nearly £17 million in adjusted items, including a significant U.S. inventory provision and goodwill impairment.

• Net cash nearly doubled to £19.6m, driven by inventory reduction, early loan note redemption, and positive operating cash flow.

• Operating G&A reduced by 11% year-over-year to £35.9m; total inventory down 11% to £144.9m.

Outlook and guidance

• FY 2025 guidance assumes flat trends in customer recruitment, retention, and revenue per member, with revenue expected at £240–270m, a (16)% to (4)% decline.

• Adjusted EBIT (including inventory liquidation losses) expected between -£2m and £6m; closing net cash £25–35m.

• Guidance includes estimated losses of £2–£5 million from bulk inventory disposals in the U.S.

• Q1 trading in line with expectations, but volatility persists, especially in the U.K.

• Focus on achieving a 2x payback on customer acquisition by FY 2026, targeting a return to growth.