Naked Wines has returned to profit and continued to grow sales in a year that followed the shift online seen in the wine market during pandemic lockdowns. But it says that over the coming year it won’t be pursuing growth at any cost – rather it aims to break even.
Naked Wines turned over £350.3m in the year to March 28. That’s 3% more than the previous year and 73% more than two years earlier. At the bottom line it reported a pre-tax profit of £2.9m – up from a loss of £10.7m last time, and the loss of £5.4m that it reported two years earlier.
Repeat customer sales of £315.1m were 11% ahead of last year and 81% up on two years ago. Naked Wines now has 964,000 active repeat customers – 9% more than last year and 66% more than two years ago. Profit from its repeat customers came in at £86.2m during the year, up from £84.9m last year as those customers spent 13% more.
The retailer says it needs to do more to increase the lifetime value of its customers, following a strategy that sees it spend heavily to recruit shoppers that it then converts into long-term buyers.
Naked Wines group chief executive Nick Devlin says: “Naked Wines started from the simple idea that there was a better alternative to the traditional wine industry model, and that by connecting wine drinkers directly to world-class independent winemakers you could deliver a win for both winemakers and drinkers.
“In FY22 we are delivering on that idea at scale; we connected 964,000 Active Angel members to 266 incredibly talented independent winemakers; offering consumers a direct connection to where their wine comes from and access to high quality wine at affordable prices.”
He adds: “Looking ahead Naked Wines is well positioned to continue to grow amidst a changing consumer environment. Our enhanced scale, attractive unit economics and healthy balance sheet allow us to continue to invest for growth. At the same time we will not pursue growth at any cost, and our guidance is that we intend to trade the business at or around breakeven this year. We believe this is the responsible balance to strike in FY23, mindful of the levels of macro-economic uncertainty but also of the opportunities we see ahead and the potential for disruptive models like ours to gain traction in tough times as consumers revaluate their purchasing choices.
“Additionally we will focus on steps to ensure our contribution economics support sustainable growth and on striking an effective balance of quality and volume. I believe these steps will best enable us to increase customer lifetime value and therefore over the mid-term maximise our ability to deliver attractive, sustainable growth”
