The share price of the UK-based Naked Wines PLC (GB:WINE) rose almost 9% today despite the company reporting a sales slump and losses in its first-half results for FY24. Investors reacted positively to the company’s cost reduction efforts and commitment to revive its business.
The company is targeting a phase of stable cash generation and anticipates generating £40–50 million in cash from inventory over the next 18 months. It has also been able to cut down its costs by £3 million, with another £10 million on the way.
While the stock trended higher today, it has fallen by around 68% year-to-date.
Naked Wines is an online retailer of wines that supports independent wine producers.
Embracing Optimism in the Face of a Challenging Landscape
In the first half of FY24, revenues decreased by 18% on a constant currency basis to £132.3 million. Further, adjusted EBIT (earnings before interest and taxes) saw a decline of 52% to £2.2 million, while pre-tax losses expanded to £9.7 million from £0.2 million in the previous year.
The company witnessed huge demand during the pandemic as lockdowns closed pubs and bars, coupled with a spike in online shopping, but the trend is now fading. Along with this, the new challenges for the company are getting new clients and effectively managing inventory levels.
Last month, the company came to light after its CEO Nick Devlin resigned after it reported weaker-than-anticipated trading in the U.S. market. The company stated that its annual revenue for FY24 is now expected to decline by 12%-16% compared to the previous projection of 8%-12%.
On the plus side, the company reduced its general and administrative costs by 27% as part of its broader efforts to be profitable in the future.
Naked Wines Share Price Target
Analyst Andrew Wade from Jefferies is bullish on the company’s share price and is awaiting more details on how it intends to tackle its current challenges. He assigned a Buy rating to the stock today, forecasting a more than 100% growth rate.
On TipRanks, WINE stock has been assigned a Moderate Buy consensus rating backed by one Buy and one Hold recommendation. The Naked Wines share price target is 85p, with a high and a low forecast of 105p and 65p, respectively. This price target indicates a big change of 97.7% from the current share price.
