Naked Wines shares drop by 9%: Should you still buy this stock?

November 18, 2021 11:39 PM PST | By Suhita Poddar

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Naked Wines shares drop by 9%: Should you still buy this stock? — Image source: Explode, Shutterstock.com

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Highlights

Naked Wines’ shares fell sharply by over 9% on Thursday after the company slashed its sales outlook for FY 2022.

The cut was done amid the ongoing supply chain issue in the UK, which has affected wine availability.

The group reported its H1 2022 total sales rose by 82% on a reported basis to £159.3 million, from £87.5 million in H1 2020.

UK-based online wine retail company Naked Wines PLC’s (LON: WINE) shares fell sharply after the company cut its FY 2022 sales outlook in its H1 2022 results published on Thursday.

The company said the supply chain-related issues with the availability of wine is expected to hamper its new customer growth.

Naked Wines PLC (LON: WINE) share price and performance

Naked Wines’ shares ended at GBX 613.00, down by 9.19 per cent on 18 November. While the FTSE AIM UK 50 index, which it is a part of, closed at 6,685.70, down by 0.72 per cent.

The company became one of the highest losers in the FTSE AIM UK 50 index following the news.

WINE share price and performance

(Image source: Refinitiv)

The company’s market cap stood at £495.71 million, and its one-year return was at 14.15 per cent as of Thursday.

Naked Wines’ H1 2022 results

The company reported its H1 2022 total sales increased by 1 per cent from £157.1 million in H1 2021. And the increase was up by 82 per cent on a reported basis from £87.5 million in H1 2020.

The growth was due to high customer retention and growth in its repeat customer sales in the US market.

The company’s H1 2022 contribution profit rose by 13 per cent on a reported basis to £37.9 million, up from £33.7 million in H1 2021. It jumped by 114 per cent from £17.7 million in H1 2020.

FY 2022 guidance

The company forecasts its FY 2022 total sales to be between £340 million and £355 million, which is about 2 to 7 per cent of sales growth on a constant currency basis.

It had earlier estimated its total sales to be in the range of £355 million and £375 million in FY 2022. The slash highlights the lower investment levels expected in its new customers segment for the full year.

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