Naked Wines axes roles in plan to ‘pivot to profit’ 

Naked Wines has made around 6% of its workforce redundant as part of a raft of measures to help the business “pivot to profit” and reset its cost base after weaker demand hit its profitability.

It comes after investment into inventory spending and adding to its cost base did not match demand, with the group admitting it “made mistakes” in the “pursuit of rapid growth”. 

As part of its plan to return to profitability, the group confirmed it had restructured some of its teams to “create a leaner and more focused organisation”, with Sky News reporting that 30 roles have been axed in the move.  

In a bid to strengthen the business, it has also reduced its marketing investment, which was reportedly “not delivering satisfactory returns”. Marketing costs will now remain “substantially lower” than FY22 in FY24 unless it sees a marked improvement in attracting customers. 

The group has also renegotiated its banking facilities onto a sustainable long term basis and reduced future inventory commitments.

In the near-term, the group warned its pivot to profitability plan will slow sales and increase stock holding, resulting in additional cash investment in inventory over the second half of the year. 

It expects inventory to peak this month, with the group ending FY23 with approximately £185m of inventory and reverting to approximately £145m by the end of FY24. It said this reduction will stabilise the business and enable it to deliver sustained profitability going forward. 

Nick Devlin, CEO, said: “We recognise that in pursuit of rapid growth we have made mistakes. Whilst the business today remains materially bigger than pre-pandemic, in 2021 we bought inventory and added to our cost base in anticipation of sustained faster growth which has not been delivered; today we are taking steps to reset our cost base and unwind inventory levels. 

“We commit to not only resolve these challenges but also to ensure they are not repeated. While the operating environment remains challenging, with low consumer confidence and high levels of supply chain inflation, we have taken steps to reconfigure Naked appropriately….These steps will lay the foundation for a return to our ambion of sustained, profitable growth, whilst also providing us with greater resilience against macroeconomic challenges.” 

Alongside its operational and strategic changes, the group separately announced a number of changes to its board. Darryl Rawlings will step down as chairman, effective today (20 October), and as a member of the board at month’s end. David Stead will instead assume the role of chairman.

Devlin said: “I would like to thank Darryl Rawlings for his service and counsel over the past 18 months and welcome David Stead into his new role as chairman of the board. This change in direction has been hard, but it has been necessary. We are committed to driving Naked forward and to delivering for all of our stakeholders – customers, winemakers, people and shareholders.”