Home delivery wine business saw profits soar by 68% to more than £340m
Home delivery wine business saw profits soar by 68% to more than £340million as lockdown-weary Brits enjoyed a tipple at home while pubs were closed
- Bosses at Norwich-based Naked Wines said sales jumped in the year to March 29
- But despite the boost in sales, losses widened as company focused on expansion
- Looking forward, bosses said they will be focusing their attentions on the US
- Majestic Wine, spun off from Naked Wines in 2019, also saw record online sales
A home delivery wine business saw profits soar by 68 per cent to £340.2million as lockdown-weary Britons enjoyed a tipple at home while pubs were closed.
Bosses at Norwich-based Naked Wines announced that sales of online drink orders jumped in the 12 months to March 29.
But despite the boost in sales, losses widened as the company focused on expansion to tap into the growing market.
Pre-tax losses hit £10.7million compared to £5.4million a year earlier. Analysts had estimated a loss of £10.4million, according to Refinitiv Eikon data.
The firm suggested this approach was paying off with profits from repeat customers contributing £84.9million, with increased profit margins up 30 per cent.
Rowan Gormley, who founded Naked Wines and is now CEO of Majestic Wine, pictured above. Sales of online drink orders jumped in the 12 months to March 29
Independent retail analyst Nick Bubb said: ‘It is a surprise that losses actually increased slightly, given new customer acquisition costs, but investors will be reassured to hear that sales are still increasing’.
Stifel analysts also said: ‘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.’
But it is uncertain if the trends would hold up in a post-Covid world, they added.
To improve its offer, Naked Wines said it teamed up with 235 winemakers across 19 countries and also provided financial support to 36 of them through a five million dollar (£3.5million) Covid relief fund.
Looking forward, bosses said they will be focusing their attentions on the US where the market is said to be worth $20billion (£14.1billion).
Sales in the States hit £161.7million, up 78 per cent, driven by an increase in awareness and demand and boosts in order frequency from repeat customers.
In the UK, sales hit £133.1million, up 66 per cent for similar reasons, the company said.
Since the end of March sales have continued to grow – up 8 per cent in April and May compared with a year earlier, despite tough comparisons as shops shut and households stayed indoors as the first lockdowns were imposed.
View of an empty beer garden in Thurnby in July last year. Sales for Naked Wines next year are expected to be between £355million and £375million
Compared with April and May in 2019, before the pandemic, sales are up 96 per cent on a like-for-like basis.
Sales next year are expected to be between £355million and £375million, with £40million to £50million invested in winning new customers.
A similar amount is expected to be invested in strategic initiatives and bosses admitted they expect to see a slight fall in repeat customer profit margins.
Chief executive Nick Devlin said: ‘It is clear to us that the pandemic has served to underscore the value of our business model in connecting winemakers and consumers directly and proven the opportunity before us.’
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.
Majestic Wine, spun off from Naked Wines in 2019, has also seen record online sales in the pandemic (file photo of a Majestic Wine Warehouse in Stockport)
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