Naked Wine's interims had several positives, says broker Jeffries, notably the all-time low in repeat customer attrition and early indications that improvements to the new customer proposition are working.
A reiteration of 2024 guidance and an upbeat tone on the shift to cash generation, with a £40m-50m anticipated inflow from inventory by the end of 2025, also were good signs said the broker.
"Given this substantially improved outlook for cash generation, a net cash position that has strengthened since half year (£7m from £3m), and £53m of available liquidity, we see funding risk as receding," said the broker.
Trading since early November has been 'satisfactory', with order volumes in Nov/Dec consistent with revised guidance.
Resilient customer base
“While Naked Wines is clearly facing challenges, we highlight the continued resilience/loyalty of its core customer base,” said Jefferies.
“Repeat customer attrition has hit an all-time low (33%) and spend per Angel increased in each market (even if at a slower rate than historically).
“The big question for the business remains whether or not it can efficiently recruit sufficient customers to return to growth”.
On this score, Jefferies adds there are “green shoots” evident,
The UK is returning to a stable membership base while Naked is testing a number of improvements to drive payback and help access a wider demographic'.
“It appears that at least one of the ideas is a winner' and Naked is currently testing at scale over peak", Jefferies added.
The price target is 95p with the shares up 9% today at 47p.