Naked Wines lifts profit outlook as strategy aims for smaller, more profitable business

Naked Wines plc shares rose sharply on Thursday after the London-listed wine club upgraded its profit outlook for the year. The online wine retailer, which connects buyers with independent producers, said adjusted EBITDA was likely to come near the top end of its published guidance as it pursues a strategy focused on profitability over scale. The update sent the stock higher, with Naked Wines up about 8% to 72p, though the shares are still far below their 2021 peaks when they traded at more than ten times that price. The company also noted that its current trading momentum remains positive across all markets and that it is maintaining a disciplined approach to costs and acquisitions.

While profits were upgraded, the group signalled that revenues would come in at the lower end of guidance as it continues to implement a plan to remove inefficient investments and build a "smaller but materially more profitable business". This aligns with the previously communicated strategy of returning to profitable growth while gradually expanding EBITDA over the medium term.

On the profitability front, Naked Wines said it delivered adjusted EBITDA excluding inventory liquidation and related costs of £3.6 million, up 112% from £1.7 million in HY25. Gross profit margin rose to 19.5% from 16.9%, with roughly half of the improvement attributed to price increases and cost savings, including reduced acquisition costs. The balance largely reflected FY25 inventory movements. The company also noted it had sold more than 70,000 special 'Big Christmas Cases' between 1 November and the start of December.

The stock has rebounded from pandemic-era highs but remains markedly below its pre-2021 peak, with Naked Wines trading about 92% lower than its April 2021 peak. The group said the ongoing shift toward a smaller but more profitable model is targeted at delivering a return to profitable growth, with Adjusted EBITDA expected to rise progressively over the medium term. In its note, Naked Wines said it would publish a fuller trading update in mid-January.

Investors have monitored Naked Wines as a bellwether for consumer-focused, direct-to-consumer food and beverage platforms that benefited during lockdowns but faced tougher comparisons and cost pressures as activity normalized. The company has stressed that its strategy emphasizes tighter capital discipline and more selective investments to improve unit economics while preserving brand and supplier relationships.

Naked Wines also pointed to the broader market environment, noting that current peak trading conditions appear to be giving way to a more sustainable, long-run profitability trajectory. The firm’s approach contrasts with a previous period of rapid expansion funded by aggressive customer acquisition and inventory investment, an approach it has since scaled back in pursuit of higher margins and cash generation.

From a market perspective, Naked Wines has historically demonstrated volatility in its share price, surging during the Covid-19 lockdowns before retreating. The latest upgrade underscores how the company’s emphasis on profitability could influence investor sentiment as it provides a clearer path to long-term value creation. The company’s management will face questions about the pace of margin improvement and how recurring revenue streams and cost controls will translate into sustained earnings growth in the coming quarters.

Market watchers will be looking for further detail in the forthcoming trading update, including any nuanced guidance for the remainder of the financial year and the potential impact of global supply-chain dynamics on both pricing power and inventory management.