Naked Wines PLC – Half-year Report
● Trading broadly on track
○ Revenue growth to £87.5m (+16% reported, +13% underlying(1)(6)), with the US the largest and fastest growing market (+24% reported, +17% underlying(1)(6)) trading well on all measures
○ Investment in new customers(6) up 29% to £10.3m, payback forecast(6) 3.8x
○ Repeat customer contribution(6) +8% supported by repeat sales retention(6) of 79% +1%
○ Targeting £20-25m of investment in new customer acquisition(6) in FY20 at a lifetime payback(6) of 3.8-4.0x in line with our disciplined investment approach
○ As expected, the increase in investment in new customers(6) of £2.3m, drove continuing operations adjusted EBIT(2)(6) of (£3.8m) lower vs FY19 adjusted EBIT of (£1.7m).
○ Reported EBIT for the continuing business is (£5.7m), £1.0m adverse year on year whilst Reported EBIT for the discontinued business of £0.2m is £4.8m adverse year on year. Total Loss for the period after tax of £6.4m is £6.3m adverse to the same period last year.
● Naked positioned for long-term growth
○ Naked Wines now a single brand and pure-play online business
○ Disposals to realise £111m contracted in respect of Majestic Retail, Commercial and Lay & Wheeler and an associated property disposal. Majestic sale due to complete by end of calendar year.
○ Disposals will deliver strong balance sheet with strong net cash position after full repayment of period end net debt (£25.8m)(6)
○ With the transformation complete and the business well set for its next stage of growth Rowan Gormley, founder and CEO, has decided that now is the right time for a different set of leadership skills. He will hand over to the current COO, Nick Devlin and will retire from the Company when the important Christmas trading season and the Majestic disposal is complete (see separate announcement).
● Entering the next chapter
○ Well capitalised to focus on high growth in a large addressable market, particularly in the US
○ Management team and customer proposition in place to take the business into the next chapter of its growth
○ Initiatives to strengthen customer proposition commenced including further improvement to our winemaker portfolio in the period
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Continuing operations |
|
Reported |
|
Underlying(1)(6) |
||||
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|
|
H1 FY20 |
H1 FY19 |
% YoY |
|
H1 FY20 |
H1 FY19 |
% YoY |
|
Revenue |
£m |
87.5 |
75.7 |
15.6% |
|
87.5 |
77.3 |
13.2% |
|
Adj EBIT(2)(6) |
£m |
(3.8) |
(1.7) |
-119.7% |
|
(3.9) |
(1.7) |
-124.1% |
|
Adj PBT(3)(6) |
£m |
(4.4) |
(2.1) |
-104.0% |
|
(4.4) |
(2.1) |
-103.9% |
|
Loss before tax |
£m |
(6.2) |
(5.1) |
-21.5% |
|
|
|
|
|
Free Cash flow(5)(6) |
£m |
(11.0) |
(11.5) |
|
|
|
|
|
|
Discontinued operations |
|
Reported |
|
Underlying(1)(6) |
||||
|
|
|
H1 FY20 |
H1 FY19 |
% YoY |
|
H1 FY20 |
H1 FY19 |
% YoY |
|
Revenue |
£m |
145.6 |
153.4 |
-5.1% |
|
146.1 |
152.1 |
-3.9% |
|
Adj EBIT(2)(6) |
£m |
2.2 |
4.7 |
-53.5% |
|
1.7 |
4.7 |
-64.0% |
|
Adj PBT(3)(6) |
£m |
1.3 |
4.7 |
-72.7% |
|
1.7 |
4.7 |
-64.0% |
|
(Loss)/ profit before tax |
£m |
(0.7) |
4.9 |
-114.3% |
|
|
|
|
|
Free Cash flow |
£m |
1.7 |
4.2 |
|
|
|
|
|
|
Total Group |
|
Reported |
|
|
|
|
|
H1 FY20 |
H1 FY19 |
% YoY |
|
Revenue |
£m |
233.1 |
229.1 |
1.7% |
|
Adj EBIT(2)(6) |
£m |
(1.6) |
2.9 |
-156.8% |
|
Adj PBT(3)(6) |
£m |
(3.1) |
2.5 |
|
|
Adj EPS(4)(6) |
p |
(3.6p) |
3.7p |
|
|
Loss before tax |
£m |
(7.0) |
(0.2) |
|
|
Basic EPS |
p |
(9.0p) |
(0.1p) |
|
|
Dividend per share |
p |
– |
2.0p |
|
|
Free cash flow(5)(6) |
£m |
(9.3) |
(7.3) |
|
|
Net Debt |
£m |
(25.8) |
(20.1) |
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Rowan Gormley, Group Chief Executive, commented:
“We have built a solid foundation for growth. Naked Wines is now a pure-play online retailer, with a huge opportunity in the US wine market, and the resources to capitalise on that opportunity.
Trading has been broadly on track in the first half. Naked’s US business is well up on the key measures of investment, payback and sales. Consistent with our disciplined approach to investment we will slow the rate of increase of investment in new customers in the second half, due to sluggish performance in the UK and Australian markets.
I will be retiring shortly and will be handing over the CEO role to Nick Devlin, our COO and the man who has built our US business. The company is in excellent hands.
I want to thank our customers, people, winemakers and shareholders for their fantastic support over the last 10 years. I look forward to remaining a material shareholder – and a material customer!”
Nick Devlin, Group Chief Executive Designate, commented:
“Naked has an exciting opportunity ahead to build on its community that connects over half a million wine-drinkers with over 200 of the world’s leading independent winemakers. I have been a part of that community for four years and overseen the rapid growth of the US operations for the past three.
Naked has never been in better shape and we now have the internal capability, clarity of purpose and financial resources to take the business through its next chapter of growth. I am enormously excited to be given the opportunity to harness this platform and realise Naked’s full potential.”