UK companies Entain, Naked Wines and retailer THG received a boost from consumers changing habits and spending more online during lockdown, underlining their status as pandemic beneficiaries.
Entain, the gambling group behind Ladbrokes and bwin.party, reported that online revenues had jumped a third between January and March, even as the closure of its bookmakers’ shops dragged down overall gains.
Naked Wines said its subscriber base grew 50 per cent to 885,000 in the year to March, while overall sales growth reached 68 per cent, exceeding projections. Demand had increased particularly fast in the US, where sales rose 75 per cent to about £150m, as social-distancing restrictions helped normalise online alcohol shopping.
The US is now Naked’s biggest market, accounting for 45 per cent of sales, compared with roughly 40 per cent from the UK.
The practice of buying wine online had gone from “being taboo to absolutely mainstream and normal” during the pandemic, said its chief executive Nick Devlin, who relocated to Napa, the heart of California’s winemaking region, in 2017.
Online retailer THG said trading in the first quarter had been ahead of expectations, with sales up 41 per cent, led by its core beauty and nutrition businesses.
AO, the online electrical retailer, also reported strong growth on Thursday, with overall revenues up more than 60 per cent to £1.66bn in the year to March, and its UK website delivering year-on-year sales growth of 88 per cent in the fourth quarter.
“When you are working from home, you use the products we sell more intensively,” said John Roberts, AO’s chief executive. He believed the company would be able to increase sales by a double-digit percentage this year even as it came up against strong comparative figures from the early stages of the pandemic.
“Even this week, when stores have reopened and we are starting to lap those comparatives, we have been up 25 per cent,” he said.
The companies are among a growing list of beneficiaries from a boost in online trading, as customers confined to their homes during the Covid-19 pandemic spend more on services such as food deliveries and entertainment, as well as DIY.
Deliveroo said on Wednesday that its order volumes more than doubled to 71m in the first quarter of 2021, with customer numbers also increasing sharply.
Home improvements, a previously low-growth sector of retail, has also been a winner as cash that might once have been spent on nights out or holidays is poured into homewares, gardens and decorating. Wickes, the UK’s third-largest DIY chain, on Thursday said same-store sales grew 19 per cent in its first fiscal quarter.
Retail trading platforms have also benefited from a rise in online investing, while gambling providers have reported strong increases in online bets.
Entain said online net gaming revenue grew 33 per cent in the first quarter. That represented a slowdown in growth following a fourth-quarter 41 per cent increase in digital revenues. It was however the group’s 21st consecutive quarter of double-digit increases online — a record sustained during the pandemic by punters looking for entertainment during months of lockdown.
Across the industry, online gambling groups have seen significant upticks in activity as sport returned following the initial pandemic shutdown and while betting shops have been forced to shut.
Last Saturday’s Grand National horseracing was the UK’s largest online sports betting event.
Entain said on Thursday that overall revenues in the three months to the end of March fell 13 per cent compared with the same period last year as it was hit by its more than 3,000 shops being “almost all entirely closed” because of government restrictions in the UK and Europe.
Last month, Entain’s rival Flutter revealed that its online revenues had increased 34 per cent in 2020 compared with the previous year and that digital income now made up 94 per cent of overall group revenue.
Devlin of Naked Wines was cautious about the next year, saying that the company was not expecting revenue growth to continue at the same rate once restaurants and bars fully reopened. Sales data was, however, showing that “people have formed very powerful habits and this will lead to an enduring change”.
Analysts at Investec said the direct-to-consumer market for wine was facing “fundamental structural changes, accelerated by the pandemic, giving Naked the benefit of scale and leading to enduring improved customer economics”.
The subscriptions business was bought by retailer Majestic Wines in 2015, but was spun out fours years later when asset manager Fortress acquired Majestic in a deal worth £95m.
Both businesses have been boosted by the pandemic as people have been drinking more at home rather than at bars and restaurants.