Online retailer Naked Wines saw its stock price crash 35% this morning despite posting pre-tax profit of £2.9 million, versus a loss of £10.7 million in its full year results to 28 March.
Revenue also increased by 3.0% to £350.3 million from £340.2 million. However, the results revealed that the company’s cash balance had more than halved to £40 million from £85 million a year agocausing panic across the markets.
The company’s costs were similar to last year as advertising costs fell to £34.1 million from £42.3 million, but fulfilment costs increased to £62.6 million from £58.3 million.
The company was bullish and said it would not pursue growth “at any cost” and that it intends to trade the business at “in or around breakeven this year”.
Nick Devlin, group CEO at Naked Wines, said that the company was “well positioned to continue to grow” amidst a “changing consumer environment”.
He added: “In the past year we moderated investment responsibly as we navigated inflationary challenges. In that context, I’m pleased with the substantial growth in sales to repeat members supported by sales retention above our expectations for the year at 80% and our ability to deliver profitability.”
Devlin said that his position was a responsible balance to strike looking forward to 2023 and that he was “mindful of the levels of macro-economic uncertainty” but that he also saw opportunities and the “potential for disruptive models like ours to gain traction in tough times as consumers revaluate their purchasing choices”.
Naked Wines was founded by Rowan Gormley in 2008 and was acquired by bricks and mortar player Majestic Wines in 2015.