Vintage Wine Revenue Rose 33% in Fiscal 2022, So Why Did a Small Loss Cause Stock to Plunge 40%?

The loss was $571,000 against net revenue of $293,770,000.  That's right, the stock plunged 40% because the company incurred a loss of 0.0019% of net revenue.

One answer, suggested by CEO/founder Pat Roney, was changes in VWE's accounting operations, including a new chief financial officer and several other key leadership position.  Kristina Johnson, the new CFO, said: "“We have instituted improved accountability metrics, updated assumptions for overhead absorption processes better reflecting the current business and created greater discipline around timeliness in reporting throughout the organisation."

Roney said the company was aggressively moving forward on acquisition "as we transform the company into a much larger, more significant player in the wine industry."

Fourth quarter wholesale sales grew 55%, tasting room traffic grew organic direct-to-consumer sales 10% in the fourth quarter, the company reported.  The fourth period is also when the company took a number of non-cash charges that resulted in a loss.

Roney commented, “We are executing well on our strategy to drive growth, are successfully diversifying and expanding our portfolio and upgrading our capabilities and capacity. As an organization, I believe we made great progress in our first year as a public company even in the face of supply chain constraints and significant cost pressures due to rapid inflation.

"Importantly, we are establishing an improved accounting structure, implementing strengthened processes and controls and we are investing in our infrastructure to provide a solid foundation from which we can scale. This includes a stronger accounting and finance team under a new chief financial officer as well as the addition of several other key leadership positions. The processes that we have since implemented to work towards remediation of our material weaknesses drove the non-cash adjustments in the quarter. We expect this will not only improve the quality of our financials, but enable greater consistency and transparency moving forward."

He added, "Our acquisitions are integrating nicely and over time, we believe they will deliver greater synergies and margin expansion. Continued challenges with the supply chain disrupted our ability to capture certain synergies as timely as we had planned.

"For example, necessary equipment for the expansion of our canning capacity in both Sebastapol, CA and Cincinnati, OH was delayed by approximately 6 months. In addition, the pick & pack operation for Vinesse was several months behind schedule. As these operations get back on schedule, we expect to see lower operating costs and improved production efficiencies.

"We are excited about the strength of our channels to market, the power of our brands, and our digital marketing capabilities. We are actively advancing our acquisition pipeline and believe that fiscal 2023 will be another strong year for VWE as we transform the Company into a much larger, more significant player in the wine industry."