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Naked Wines sales surge comes at a cost

Fri, 11th Jun 2021 09:35

June 11 (Reuters) - Naked Wines Plc's annual sales
leapt 68% as more people ordered wine online during lockdowns,
but a jump in advertising costs led to a bigger loss, results
showed on Friday.

Naked Wines, which sells to its 300,000 customer base via a
subscription model, said its advertising costs more than doubled
to 42.3 million pounds, or about 12% of total sales, for the
year ended March 29, up from 19.8 million pounds a year earlier
as it chased new customers in the U.S. and UK.

That paid off, with the Norwich-based company reporting a
53% surge in total customers and a 78% growth in U.S. sales, now
its largest market.

However, its shares fell 1.5% to 782 pence by 0729 GMT as
its loss before tax nearly doubled to 10.7 million pounds
($15.15 million). Analysts had estimated a loss of 10.4 million
pounds, according to Refinitiv Eikon data.

"Stay-at-home trends have driven a step-change in volumes
for the online wine sector, which Naked is capitalising on –
with some encouraging signs of a permanent channel shift from
offline to online," Stifel analysts said.

However, it is uncertain if the trends would hold up in a
post-COVID world, they added.

Naked said its strong performance has continued in the new
fiscal year, and estimated an investment of 40-50 million pounds
in new customers.

Majestic Wine, spun off from Naked Wines in 2019, has also
seen record online sales in the pandemic. The specialist wine
seller said on Friday it was bracing for its "biggest ever
summer" as it reopens stores.
($1 = 0.7061 pounds)
(Reporting by Vishwadha Chander in Bengaluru;Editing by Elaine
Hardcastle)

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