The company’s CEO acknowledges “mistakes” as Naked cuts back its objectives following an unsuccessful attempt to maintain growth during the COVID era.
After a failing growth strategy necessitated a restructuring, Naked Wines laid off around 6% of its staff.
The online store, which connects its customers with products from independent winemakers, announced the departure of 30 employees to establish a “leaner and more focused organization” and save approximately £18 million.
Naked had invested heavily in marketing and wine inventory to expedite growth and capitalize on the COVID pandemic’s spike in customer numbers and revenue.
The financial losses worsened when the cost did not meet the demand, and shares have lost 85% of their value just this year.
They peaked at 868p last year and were trading at 94p before the opening bell on Thursday.
Nick Devlin, the chief executive, told investors: “We acknowledge that in our quest of rapid expansion, we have made errors.
“While the firm is still significantly larger than it was before the pandemic, in 2021 we purchased inventory and increased our cost base in anticipation of continued higher growth that has not materialized.
Today, we are resetting our cost base and reducing our inventory levels.
The company used its trading update to reduce its sales forecast for the current fiscal year to March 31.
It was projected that revenue would fall between 4% and 9% during the current fiscal year.
Additionally, Naked disclosed that chairman Darryl Rawlings had resigned and will be replaced by David Stead, a five-year company director.
The company stated that its revised business plan, which includes a halving of its investment spending to approximately £23 million, will “generate substantial positive cash flow” beginning in the second half of the year.
This forecast plus news of the more conservative strategy contributed to a 30% increase in share price at market open, to 122p per share.
