Naked Wines confident of future growth as pandemic sales momentum continues

Online drinks retailer Naked Wines said today (6 August) it continues to trade strongly, with sales in July expected to be up by 73% compared to the same month last year.

This would bring sales growth in the first four months of the financial year to 76%, and the retailer said its success is being driven by new customers and repeat sales alike.

Ahead of its annual general meeting today, Naked said significant uncertainty remains for the remainder of the year due to macroeconomic factors associated with Covid-19 but it remains confident about its position against this backdrop.

Mapping out potential scenarios due to this environment, Naked said its central case assumes heightened levels of new customers and repeat purchase frequency will reduce over summer, meaning it will enter peak period with a larger customer base and more normalised trading patterns for each customer.

If this is the case, it expects total sales growth for the full year of around 40%, repeat customer contribution of £65-70 million, and investment in new customers of £35-40 million.

Naked said it is committed to maximising investment in new customer acquisitions subject to meeting its returns criteria, and it will invest in inventory and operational capacity to support this drive.

Nick Devlin, CEO of Naked Wines, remarked: “I’m pleased to report continued strong rates of new customer growth and particularly strong repeat trading momentum as we see evidence of new customers recruited during the Covid-19 pandemic converting to repeat customers.”

Reiterating comments made earlier this year at the height of the health crisis in the UK, Devlin added: “The evidence we are seeing across our markets is consistent with our view that Covid-19 has served as an inflection point for the online wine market, with Naked uniquely placed to benefit from that.

“We have the balance sheet strength and operational agility to enable Naked to continue to focus on ways to accelerate growth and take advantage of the opportunities presented by the new and evolving consumer landscape.”

A report released this week by the KPMG/Ipsos Retail Think Tank suggested six retail models will prevail in the wake of the coronavirus pandemic, two of which – direct to consumer and category specialist – could be used to describe the Naked format.

The group of analysts and consultants also backed the following for success: international platform ecosystems; multinationals evolving into platform businesses; large-scale domestic retailers seeking buying alliances or partnerships; and value-based retail.