Naked Wines Raises FY23 Profit Expectations – Expects ‘Modest’ FY24 Revenue Decline

Naked Wines (LON: WINE) raised its FY23 adjusted EBIT expectations on Tuesday following a solid third-quarter trading performance.

Even so, Naked Wines shares are down around 0.42% at the time of writing.

The company said it now expects FY23 adjusted EBIT to be in the range of £13 million to £17 million, up from the previous expectation of between £9 million to £13 million.

In October, the AIM-listed company said it would pivot to focus on profitability, and it expected sales to fall in the near term.

However, the company said that in the quarter ended December 26, revenue was flat compared to last year, as a 3% increase in repeat customers offset a 27% decline in new customers.

In addition, US sales increased by 2%.

“We have executed well against our pivot to profit in our key holiday quarter delivering flat reported revenue vs prior year (-6% constant currency), improving year-on-year repeat customer contribution margins and tightly controlling our SG&A expenses,” said Nick Devlin, Naked Wines Group Chief Executive.

However, he acknowledged that the consumer and marketing environment remains challenging, and the possibilities to invest in new customer recruitment “at attractive payback levels” remain limited.

The company sees spending on new customer investment in FY23 at between £20 million and £24m, around 40% below FY22 levels.

As it is below the company's run rate required to maintain its current scale, it said it is likely to see a modest decline in revenue in FY24.

“As we enter our detailed FY24 planning cycle we will be evaluating a number of options to improve this outlook while remaining disciplined in our approach to investment evaluation and capital allocation,” added Devlin.