Naked Wines PLC

LSE:WINE

Cash Generation: After years of consuming cash, Naked Wines is now entering a period of sustained cash generation, driven by inventory reduction and tighter cost controls.

Cost Savings: The company has already cut costs and has firm plans to remove more than £10 million in additional expenses, lowering the breakeven sales level by about 10%.

Repeat Customers: Existing customers are performing well, with sales per customer up year-on-year and attrition rates at historic lows, though the customer base has shrunk due to tough new customer acquisition.

New Customer Challenge: Acquiring new customers remains difficult, which is the main headwind to growth, but management reports early positive results from initiatives targeting younger demographics.

Guidance Reiterated: The company reaffirmed guidance, expecting constant currency revenue to decline 12–16% for the year, with adjusted EBIT of £2–6 million and a small net cash balance at year-end.

Margin Pressure: Repeat customer contribution margin fell from 28.4% to 25%, mainly due to heavier promotions and higher Australian fulfillment costs, but improvements are expected in FY '25.

Solid Balance Sheet: Net cash, almost £90 million in net assets, and refinancing of lending facilities are seen as key strengths supporting future profitability and liquidity.