18 January 2024 , 12:25
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Naked Wines, the struggling online wine retailer, has announced job cuts across the company, including its board, in an effort to reduce costs as sales continue to fall.
The firm plans to save an additional £7 million annually by reducing "all levels of the organisation". The company also revealed that it is downsizing its board, with non-executive director Melanie Allen leaving her position immediately. According to the company, about 50 jobs will be lost overall.
This news was shared in a trading update which showed a 10% drop in sales year on year during its third quarter and over Christmas, usually their busiest selling period. Just two months ago, Naked Wines' former CEO, Nick Devlin, abruptly resigned following a severe profit warning.
Founder and chairman Rowan Gormley has taken over until a permanent replacement is found. Mr Gormley, now the executive chairman, said: "We have to recognise that we are a smaller company post-Covid and our cost base has to reflect this."
"We have therefore taken the painful but necessary decision to reduce SG&A (selling, general and administrative expenses) costs by £7 million per year, securing our profit potential. Sadly this means that we will be losing a number of valued colleagues who have been informed of our plans."
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Despite a drop in sales, they've seen an improvement over the last quarter compared to the 18% decrease noted in the first half. "For the first time, we are seeing signs of new customer acquisition coming back to life which should support further improvement in the top line trend," commentated Mr Gormley.
They're expecting underlying earnings between £3 million and £5 million for the third quarter. Shares were up by 7% during Thursday's morning trading session.
The company had a difficult first half, with poor performance in the US resulting in a warning of up to a 16% drop in sales over the full year, affecting profits. US sales decreased by 20%, and in the UK sales were down by 11% For the first six months, Australia saw a dip of 19%.
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