U.K. Wine Merchant Jumps as Drinking Moves From Bar to Sofa
U.K. Wine Merchant Jumps as Drinking Moves From Bar to Sofa
(Bloomberg) --
U.K. pub companies’ stocks have tumbled this year due to lockdown measures aimed at stemming the spread of the coronavirus. But shares in one small wine merchant have surged.
Naked Wines Plc has jumped about 33% in 2020 to give it a market capitalization of 219 million pounds ($273 million), as Britons confined to their homes stock up on booze bought online. By contrast pub operators JD Wetherspoon Plc and Mitchells & Butlers Plc have seen their shares drop by 39% and 49% respectively.
“Since restrictions on social gathering began, we have seen higher levels of demand from both new and repeat customers,” Norwich, England-based Naked Wines said in a statement Thursday. It added that it has had to prioritize orders from repeat customers due to demand surging at a time when social distancing guidelines are impacting its warehouse operations. But the firm is still taking orders from new clients, a spokesman confirmed by phone.
“There are clearly a large number of new customers buying their lockdown booze,” Liberum Capital analyst Wayne Brown said in a note to clients. However, he cautioned that it’s unclear whether demand may change once restrictions end, keeping a hold rating on the stock.
Peel Hunt analysts Jonathan Pritchard and John Stevenson had a similar warning: “The big question mark is whether these customers will hang around or not,” they wrote in a note, also maintaining the stock with a hold rating, while admitting they had missed the bounce.
“It should have been obvious that demand would spike,” they said.
©2020 Bloomberg L.P.