Naked Wines downgrades FY guidance, shares tank

Naked Wines downgraded its full-year guidance on Tuesday as it cited a weaker-than-expected performance in the US, sending shares in the online wine retailer tumbling.

The company also announced that chief executive officer Nick Devlin has agreed to step down with immediate effect. Founder and chairman Rowan Gormley will take on the role of executive chairman on an interim basis until a successor is appointed.

Devlin will continue in the role of president of Naked Wines USA through the peak trading period before leaving the group fully.

The retailer said in an update that while second-quarter trading in UK and Australian markets has been broadly in line with the forecasts supporting prior guidance, trading in the US in Q2 and October has been weaker than anticipated.

In particular, repeat business has fallen short of targeted revenues and contribution margins.

First-half revenues were down 11% in the UK, 20% in the US and 19% in Australia, leading to an overall group revenue decline of 17%.

Naked Wines now expects full-year revenues to decline by 12% to 16%, versus previous guidance for an 8% to 12% fall. Meanwhile, adjusted EBIT expectations were cut to between £2m and £6m, down from £8m to £12m.

Gormley said: "It is disappointing to be warning of underperformance against a recent forecast. While trading in the UK and Australia has been in line with the board's expectations, current trading in the US has fallen well behind, both in terms of sales and margin. Customer attrition remains at historically low levels.

"My view is that this shortfall is largely to do with execution, which in turn is largely due to Nick Devlin splitting his time across both the role of CEO and US President.

"To resolve this situation Nick has agreed to step down as CEO and I will move to executive chairman while we recruit a replacement. Nick has agreed to help with the transition and stay on as US President through peak."

At 0955 GMT, the shares were down 34% at 29.90p.