Right, let’s pop the cork on Naked Wines’ full-year results. After a turbulent few years, this feels less like a standard earnings report and more like a carefully orchestrated comeback tour. Under new CEO Rodrigo Maza and CFO Dominic Neary, the focus has shifted decisively: less frantic growth, more financial discipline. And the numbers? They’re telling a story of stabilisation, cash generation, and – crucially – the return of shareholder distributions. Let’s dive in.
Financial Performance: Losses Narrow, Cash Flows Improve
First, the headline act. Revenue landed at £250.2 million, down 14% year-on-year. That’s not pretty, but it’s exactly where management guided – and importantly, it’s an improvement on the 18% decline seen in FY24. The revenue drop stems from three main factors:
- The COVID hangover: Attrition from those massive FY21/FY22 customer cohorts (acquired during lockdowns) is finally easing.
- Strategic pullback: They deliberately cut inefficient marketing spend in Q3/Q4 FY25, sacrificing some volume.
- External pressures: No Easter trading in the UK financial year and broader economic headwinds played a role.
Profitability & Cash: The Real Wins
Where the narrative gets interesting is beneath the top line:
- Loss Before Tax: Sharply reduced to £4.9 million (from £16.3 million in FY24). This excludes a £9.9m impairment charge from the prior year, but still shows progress.
- Cash is King (and Queen): Net cash (excluding leases) surged to £30.1 million (up £10.5m YoY). Free cash flow was the star – £18.5 million generated, nearly triple the £6.7m in FY24. This was overwhelmingly driven by slashing inventory.
- Adjusted EBITDA (ex-inventory costs): £6.7 million, down from £8.7m but in line with guidance. Gross margin held relatively steady at 18.4%.
The standout achievement? Inventory reduction. Total stock (including winemaker advances) plunged by £37 million to £108 million. This wasn’t painless – it cost £6.5 million in liquidation charges – but it’s fundamental to unlocking cash and right-sizing the business.
Operational Reset: Leadership, Retention & The Core
Beyond the numbers, Naked’s rebuilding its foundations:
- New Leadership, New Culture: Maza and Neary have rebuilt the exec team, embedding a “data-led, high-performance culture.” Transparency and discipline are the new mantras.
- Member Retention Holds Firm: 75% retention rate (unchanged YoY). Crucially, profitable core members (those with >24 months tenure) generated over £40 million in repeat contribution – the engine room of the business.
- Customer Love is High: Net Promoter Score (NPS) jumped to 76 (“excellent”), up from 73. Customers who stick around really like the offering.
- Acquisition Cost Creep: Customer Acquisition Cost (CAC) edged up slightly to £74 (from £73). Reducing this is a stated priority under the new marketing strategy.
Maza’s emphasis on “testing, learning, and doubling down on what works” signals a pragmatic, less scattergun approach. Australia even returned to membership growth – a small but symbolic win.
The Sweet Sound of Returns: Shareholder Distributions Begin
This is the bit that’ll have investors perking up. After hoarding cash through the turnaround, Naked is finally ready to share:
- Policy Unveiled: Targeting ongoing distributions of up to 40% of 12-month cash creation or adjusted EBITDA (ex-inventory costs), whichever is lower.
- Immediate Action: A proposed £2 million share buyback kicks off shortly after these results.
- Medium-Term Promise: “More significant ad hoc distributions” are flagged as cash generation and sustainable profitability build under their plan.
This isn’t just a token gesture. It’s a declaration of confidence in the improved cash flow trajectory and a commitment to capital discipline. The £20 million net cash generated since the start of FY24 provides the firepower.
FY26 Guidance & The Road Ahead
Management isn’t shouting “mission accomplished” just yet. FY26 guidance is cautious, reflecting currency headwinds (a weaker USD hits GBP revenue/EBITDA) and the ongoing inventory liquidation:
- Revenue: £200m – £216m (FX impacted, down ~£7m)
- Adjusted EBITDA (ex-inventory costs): £5.5m – £7.5m (FX impacted, down ~£1.2m)
- Net Cash (ex leases): £35m – £39m (includes the £2m buyback)
- Cost Savings: £15m of the £23m medium-term target already actioned in Q1 FY26.
The focus remains squarely on the three pillars of the March 2025 strategy: releasing working capital (£40m more targeted from inventory), recalibrating around the profitable core (targeting £9-14m EBITDA), and returning to sustainable growth (5-10% top-line).
Final Thoughts: Stability First, Then Growth
Naked Wines’ FY25 results won’t win awards for top-line growth. But that’s not the game right now. This is a story of successful stabilisation:
- Cash flow has transformed from a worry to a strength.
- Inventory – the millstone – is being decisively cut away.
- Leadership is settled and preaching financial discipline.
- The loyal, profitable customer base remains highly engaged.
- Shareholders are finally getting paid.
CEO Rodrigo Maza’s closing remark – “FY26 will be an exciting year” – feels earned, not just optimistic. The heavy lifting of the turnaround appears done. The challenge now? Translating this hard-won stability into that promised sustainable, profitable growth. One thing’s certain: after years of volatility, investors sipping that first £2m buyback might just detect hints of a more palatable vintage ahead.
