Naked Wines PLC (AIM:WINE, OTCQX:NWINF) reported growth of underlying earnings (EBIT) of 283% for the first half of its financial year as it embarks on a “pivot to profit”, while also announcing that James Crawford has been appointed as a chief financial officer on a permanent basis.
Total sales of £165.8mln were reported for the half-year to 26 September 2022, up 4% compared to a year earlier, or down 3% on a constant currency basis.
Repeat business was up 3% to £148.4mln while new business fell 8%.
Contribution profit was up 6% to £40.1mln and adjusted EBIT was £4.6mln compared to £1.2mln a year earlier.
A £0.2mln statutory loss before tax was reported, a swing from the £1.3mln profit a year ago, which was attributed to provisioning for the “material excess inventory levels” resulting from the pivot to profitability reducing current and future expected sales.
Net cash stood at £23mln at the half-year stage, with the company also able to call on £41mln of additional liquidity available from a renegotiated credit facility.
Following the announcement in October of the increased strategic focus on profit over revenue growth, chief executive Nick Devlin said the first half saw “the first steps to reduce our costs and drive improvements to our liquidity, profitability and unit economics in the near-term”.
“Ultimately, we are laying the foundation for a return to our ambition of sustained, profitable growth, whilst also providing ourselves with greater resilience.”
He said in the short-term the changes and inventory reduction plans “reduced our sales trajectory”, with the full impact to be seen in coming periods.
“However, the strength of our business model is clearly visible through underlying retention rates that remain unchanged to pre-pandemic levels, our success in realising price uplifts and improving payback levels.”
Devlin said current trading was profitable and in line with expectations over the key holiday quarter, reconfirming revised guidance of £9mln-£13mln EBIT for the full year given in October.
The company said the appointment of Crawford is effective immediately, after he had been serving as interim CFO, in addition to his role as managing director of Naked Wines UK, since July.
He was group finance director from March 2014 to July 2015 and CFO from April 2015 to November 2020 and took on the role of UK MD this month.
The company said it is actively recruiting candidates to fill the UK MD role.
Chairman David Stead said he was "thrilled to welcome James back to the board and cannot imagine a better-equipped CFO to lead Naked through its next phase”.