Naked Wines share price drops by 44%

Naked Wines share price drops by 44% after they predicted falling sales in the coming year. The announcement has caused the shares to tumble in what has been typically classified as a fast growing but loss making business. The cutting of budgets by £7.1 million has allowed a profit of £2.9 million.

Naked Wines is a UK based wine and beer company selling wines in the UK, USA and Australia. It uses the classic model of using contract winemakers to produce wines to sell to it’s mail order customers. This model was first used in the UK by major supermarkets such as Tesco and Sainsbury for their own label wines.

On June 23rd 2022 when results were announced, chief executive Nick Devlin said the business had “fallen short” of its goal to convert new customers into loyal members of its ‘Angels’ subscription model. Analysts have suggested that the fall is due to “poor customer acquisition” over the past 12 months, with a higher proportion of shoppers taking the introductory offer before cancelling their memberships.

Naked Wines downgraded its FY22 sales guidance to between £340m and £355m from £355m to £375m previously. This equates to 2% to 7% sales growth. CEO Nick Devlin declared that the company would not ‘pursue growth at any cost’ and instead would seek to trade at or around a breakeven level this financial year.