Naked Wines warns over future if ‘combination’ of factors hit cash flow

Chief executive of the group Nick Devlin said the current trading environment is likely to ‘remain tough’.

Drinks retailer Naked Wines has warned over weaker than expected sales (GH Tech/Alamy)

Naked Wines has cautioned that its future trading could be in doubt if a “combination” of factors affects its cash flow, as it slumped to a loss for the past year.

The online wine retailer saw its shares slip after it posted the delayed set of results.

Chief executive of the group Nick Devlin said the current trading environment is likely to “remain tough” but stressed that he believes the business can emerge a stronger business following turnaround efforts.

On Tuesday, the London-listed firm swung to a £15 million pre-tax loss for the year to April 3, from a £2.9 million profit a year earlier.

Meanwhile, reported sales for the year moved slightly higher to £354 million, although the company saw new sales drop by over a fifth.

Naked said it has had a tougher start to the current financial year, with revenues over the first quarter down 18% after a 41% decline in new sales.

It told shareholders it expects revenues to be between 8% and 12% lower for the year.

Naked’s bosses highlighted that it should be able to continue as a going concern even in its “downside” scenario, which would see sales slide by 17%, but this would need more predictable trading, co-operation from suppliers and new borrowing.

If it fails to secure this combination, then it could fail to meet the requirements to repay its debts and put its future at risk.

In its accounts, the company said: “There remains a risk that a combination of these assumptions could result in a reduction in actual cash flows, which would result in the business being unable to meet its covenant commitments.

“As such these factors give rise to a material uncertainty that may cast significant doubt over the going concern assumption of the financial statements.”

The whole board of Naked Wines regret that your support and patience as shareholders, winemakers, Angels and employees has not been rewarded. We are all determined to remedy that

Founder and chairman Rowan Gormley

Founder and chairman Rowan Gormley apologised for the group’s financial performance.

In a letter, he said: “The whole board of Naked Wines regret that your support and patience as shareholders, winemakers, Angels and employees has not been rewarded. We are all determined to remedy that.

“I am pleased to report that the management team have recognised the challenges very clearly, acknowledge where different actions could have been taken and are acting decisively to steer Naked through this period.

“They are highly motivated and determined to ensure that all stakeholders are rewarded for their support.”

A leaner and more focussed Naked will be best placed to deliver for our customers and winemakers. I believe we can emerge from these challenges a stronger business

Nick Devlin, chief executive

Mr Devlin said: “The trading environment is tough, but Naked remains highly resilient. Our focus now is on delivering profitable growth.

“We recognise that the environment is likely to remain tough and are configuring the business to be profitable and cash generative despite challenging conditions.

“A leaner and more focussed Naked will be best placed to deliver for our customers and winemakers.

“I believe we can emerge from these challenges a stronger business.”