Naked Wines Plc

Naked Wines Plc (LON: WINE), previously known as Majestic Wine Plc, is a United Kingdom-based holding Company, which is engaged in the retailing of wines. The Company's operations are differentiated in four separate divisions - Majestic Wine, Naked Wines, Majestic Commercial and Lay & Wheeler.

On 6 August 2020, the Group will hold the Annual General Meeting.

Trading Update (as on 24 July 2020)

During the COVID-19 pandemic, the Company has continued the strong trading, with sales growing 67% year-on-year in June 2020. This means total sales for the first quarter of 2021 increased by 77%, highlighting the continuing consumer shift to e-commerce during the crisis.

The Group also revealed the Chairman, John Walden, will be stepping down from the role due to personal reasons. He will be replaced as Chairman by Ian Harding, who is currently Senior Independent Director until the summer of 2021 when Ian is scheduled to retire. Ian played an important role in the acquisition of Naked Wines by Majestic Wine Plc in 2015.

Share Price Performance


1-Year Chart as on 24 July 2020, after the market close (Source: Refinitiv, Thomson Reuters)

Naked Wines Plc’s shares closed at GBX 406 on 24 July 2020, up by 0.25% against the last day closing price. Stock 52 week High and Low were GBX 443.00 and GBX 193.80, respectively.

From the technical standpoint, the shares were trading flat as compared to the short-term support level of 20-day simple moving average prices.

Valuation Methodology
 


Key Risks
The prevailing uncertainty had made it difficult for the Company to predict the outcome of investments made.As the Company operates in multiple geographies, the profits can be impacted negatively due to foreign exchange rate fluctuations. Some additional risks to be looked at - failure to expand portfolio due to the rising health concerns; inventory shortage due to supply chain disruption presented by COVID-19 mayhem, and the risk associated with the climate change.

Conclusion
The management continues to believe that the Group is well-positioned to be a long-term winner from the inflexion in consumer demand for online wine because of the coronavirus pandemic. The Group’s online business is expanding at a rapid pace, maintaining the online system it needs to invest heavily on upgrading existing systems, and failure to do so can negatively impact the Company’s reputation. Currently, the Group is trading near the 52-week High, raising doubts at the upside potential at the current price level.

Keeping in mind the risks faced by the Company, investors are recommended to keep a “WATCH” on the stock at the closing market price of GBX 406.00 (as on 24 July 2020), while we look for any upcoming catalysts.
 
*Dividend Yield may vary as per the stock price movement.
*All forecasted figures and Industry/Peer information have been taken from Refinitiv, Thomson Reuters.

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