Naked Wines Reports £7.6m Adjusted EBITDA, Surpassing Guidance Amid Strategic Shift to Profitability

Strategic Realignment Yields Profit Growth Beyond Prior Year Expectations

Naked Wines highlighted that its disciplined strategic refocus during the financial year ended 30 March 2026 has yielded significant improvements in profitability and cash flow. Adjusted EBITDA, excluding inventory liquidation and related costs, reached £7.6m, a 35% increase in constant currency compared to £6.7m in FY25, slightly surpassing the initial guidance range of £5.5m to £7.5m. This was achieved despite a 20% year-on-year revenue decline to £199.1m, a deliberate contraction attributed to halting acquisition of lower-quality customers drawn by heavy discounting.

Return on equity and cash improved to 12% in FY26 from 9% the previous year, driven by higher adjusted EBITDA and the positive effect of the share buyback programme, which reduced the equity base. CEO Rodrigo Maza stated that Naked Wines has refocused on its unique proposition: directly funding world-class independent winemakers and connecting them with customers who appreciate craft, provenance, and proximity to producers. The company is on track to meet its medium-term adjusted EBITDA target of £9m to £14m, with management aligned on executing this strategy through FY27 and beyond despite near-term revenue pressures.

Margin Expansion and Cost Controls Deliver £25m Annualised Savings

Gross profit margin expanded to 19.9% in FY26 from 18.4% in FY25, benefiting from price increases, improved first-order acquisition economics, reduced fulfilment costs, and revised inventory provisions. Since March 2025, the company has identified and implemented £25m in annualised savings, surpassing its medium-term £23m target, primarily through marketing spend reductions. These savings fully impact FY27 and offset costs related to transitioning to a new third-party SaaS platform announced in April 2026.

Marketing expenditure dropped sharply to £9.2m in FY26 from £20.3m the prior year at constant currency, reflecting a strategic reduction in customer acquisition volume to prioritise acquisition economics discipline. An additional £5m in targeted annualised general and administrative savings is expected by FY29 due to the SaaS platform transition, reducing the FY29/30 cost base by approximately £10m compared to FY27 projections. The company has adopted zero-based budgeting and enhanced cost control across all levels, supporting sustainable profitability as revenue stabilises and eventually grows with improved operational leverage.

Net Cash Position Strengthens to £33.4m Despite £6m Share Buyback

As of 30 March 2026, Naked Wines reported net cash excluding lease liabilities of £33.4m, up £3.3m from £30.1m the previous year, despite returning £6m to shareholders via a share buyback programme completed during the year. The company generated £9m of underlying cash, with the net cash increase reflecting this generation minus buyback expenditure. The final buyback tranche, just under £1m, was completed on 12 June 2026, totaling 7.7m shares repurchased, equivalent to 10.5% of the April 2025 issued share capital.

Positive free cash flow of £10.6m was achieved in FY26, down from £18.5m the prior year, mainly due to a slower inventory reduction as levels normalise in the UK and Australia. Total inventory, including staged winemaker payments, fell £10.4m to £97.2m—the lowest in five years—with £3.9m of the decrease due to foreign exchange and non-cash items. The board reaffirmed its commitment to ongoing shareholder distributions, including ad hoc and significant payouts, while maintaining a medium-term target to generate over £45m in cash by FY30 before distributions, having delivered £9m to date.

Member Retention Improves to 76% with Enhanced Customer Satisfaction

Member retention edged up to 76% in FY26 from 75% the previous year, while the customer net promoter score increased to 77 from 76 in FY25, reflecting the company's focus on delivering exceptional value and experience to its Angel community. Members with two or more years of tenure show retention rates around 80%, highlighting strong loyalty fostered by Naked Wines' direct connection model. Revenue per member was £388 in FY26, slightly down from £395 the prior year, while customer acquisition cost rose marginally to £76 from £74 in constant currency. However, second-half FY26 actions have driven significant improvements in early FY27 results.

Notably, acquisition break-even improved markedly from 75 months in FY25 to 42 months in FY26, with further gains in FY27, demonstrating higher quality among newly acquired customers despite lower volumes. Although the member base closed at 486,000, down from 581,000 the prior year, the company now better understands which channels, messages, and customer profiles yield durable lifetime value. Management remains committed to disciplined acquisition economics over volume growth.

Revenue Decline Reflects Intentional Shift Away from Discount-Driven Growth

Revenue fell 20% year-on-year to £199.1m in FY26 (18% at constant currency), a deliberate contraction as the company refocused on acquiring higher-value customers rather than those attracted by heavy discounting. Historically, Naked Wines chased discount-driven customers to support a larger cost base, accepting suboptimal acquisition economics. The company has now ceased this approach, which contributed directly to the revenue decline but is deemed essential for long-term business health.

The company emphasises it cannot compete at the lowest price points dominated by large retailers but aims to win customers valuing craftsmanship, producer proximity, and community membership. All markets—the UK, US, and Australia—performed in line with expectations amid the uniform implementation of the refocused strategy. FY27 guidance anticipates further revenue decline to between £158m and £175m before stabilisation, reflecting continued unwinding of lower-quality customer relationships and reduced acquisition volumes during this transition.

Transition to Third-Party SaaS Platform to Enhance Experience and Reduce Costs

In April 2026, Naked Wines announced its plan to migrate its digital platform from legacy in-house systems to a third-party software-as-a-service (SaaS) solution. This strategic move is expected to yield significant cost savings and improve customer experience and key performance indicators. Customers will benefit from a more seamless experience, while internal teams can reallocate resources from maintaining aging infrastructure to value-adding activities. Some transitional impacts are anticipated during migration, but the financial benefits are compelling.

Implementation costs are being offset by £25m in annualised savings identified since March 2025, with an additional £5m in targeted annualised general and administrative savings expected by FY29. This shift away from capital-intensive in-house infrastructure supports growth, lowers capital intensity, and reduces operating expenses, enhancing Naked Wines’ ability to generate profits and cash flow as revenue stabilises and grows with improved operational leverage.

Inventory Liquidation Continues, Driving Cash Generation Toward £45m Goal

During FY26, Naked Wines continued its inventory liquidation programme, reducing total inventory including staged winemaker payments by £10.4m to £97.2m—the lowest in five years. Of this reduction, £3.9m was due to foreign exchange and non-cash items, with the remainder representing actual inventory decreases. The statutory loss before tax widened to £6.3m in FY26 from £4.9m the prior year, reflecting £6.0m of adjusted items including £3.5m in restructuring costs, £1.8m impairment of non-current assets, and £0.7m software write-offs, alongside inventory liquidation expenses included in the reported loss.

The company maintains its medium-term target to generate over £45m in cash by FY30 before distributions, having delivered £9m so far, with approximately £36m remaining. Planned inventory liquidation and related costs of about £14m are expected by FY30, covering bulk and cased goods inventory, excess overhead absorption, and storage costs. This programme aims to accelerate cash returns to shareholders while maintaining operational capability. The company remains committed to ongoing shareholder distributions, including ad hoc and significant payments, as cash generation targets are met and the balance sheet strengthens.

FY27 Guidance Projects EBITDA Growth Despite Revenue Contraction

Naked Wines’ FY27 guidance forecasts revenue between £158m and £175m and adjusted EBITDA ranging from £7.6m to £9.0m, with net cash (excluding lease liabilities) expected between £34m and £42m. This reflects ongoing execution of the New Strategic Plan announced in March 2025 and anticipates progressive profitability growth despite further revenue contraction as lower-quality customer relationships are wound down. Guidance assumes constant foreign exchange rates of 1 GBP = 1.3 USD and 1.9 AUD, with all figures subject to currency risks across the UK, US, and Australian markets.

The company notes that member numbers and revenue will not stabilise in FY27, but profitability, cash flow, and member quality will continue improving, laying the groundwork for future stability and growth. Price increases implemented in H2 FY26 will have a full-year impact in FY27, supporting EBITDA growth. Naked Wines reaffirms its commitment to a strict 20% internal rate of return (IRR) hurdle for all capital allocation decisions, including customer acquisition and potential inorganic investments, ensuring capital deployment creates shareholder value at or above this threshold.

Disciplined Capital Allocation and Shareholder Returns Guide Investment Strategy

Naked Wines has established a disciplined capital allocation framework focused on maximising shareholder value through share buybacks, internal investments, and selective inorganic opportunities. During FY26, the company repurchased £6m worth of shares, representing 10.5% of issued share capital, at prices the board considers well below intrinsic value, and expects to continue significant buybacks in the future. This approach increases each remaining share’s ownership proportion and intrinsic value, driving substantial share price appreciation.

As the balance sheet strengthens and cash generation targets are met, Naked Wines will assess growth opportunities leveraging its expertise and tools, ensuring any inorganic expansions meet or exceed returns available from share repurchases and internal investments. This framework maintains strict capital discipline, avoiding growth initiatives that do not outperform alternative uses of capital, particularly direct shareholder returns via buybacks.