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The Naked Brand Group Limited (NASDAQ:NAKD) stock plunged today. Here’s why it happened

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SIG Stock

At last check, in the current trading session NAKD stock had plunged by -8.22% to $0.65. NAKD stock previously closed the session at $0.71. The NAKD stock volume traded at 86.33M shares while the average trading volume for the past 3 months has been 120.70M.

Naked Brand Group Limited is an apparel manufacturing company which specifically focuses on the designing, distribution, marketing and selling of women’s and men’s fashionable apparels. Naked Brand Group was established in 1947 and the company’s headquarter is present in Auckland, New Zealand. The company also focuses on women’s swimwear as one of its leading apparel products. NAKD stock has a set of different brands and platforms under which it distributes its apparel products. The company also has retail stores through which it sells its apparels, present in Australia and New Zealand.


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Naked is stripping off Bendon brick-and-mortar operations from its portfolio

On 30th April, 2021 the NAKD Company announced that its shareholders have approved the divestiture of Naked’s Bendon brick-and-mortar operations. The meeting was held on 23rd of April 2021 and after the approval the company signed the definitive agreement for the divestiture on 30th April. The transaction also closed on the same day of signing. Furthermore, the total votes for the divestiture were 118,588,762 while against vote totaled 2,076,175.

How has the company’s past operations and fundamentals been performing?

The apparel company has been reporting net losses for consecutive five years and what is worse is that these losses have ascended with the passing of years. The company reported a loss of $19.06 million in 2016 and in 2020 it reached a net total of $35.17 million.

In 2017, NAKD stock was truly in the spotlight when it traded at an all-time high of an exceptional $1420. However now, due to weakened outlook of the company’s fundamentals, NAKD stock trades around 77 cents. The stock did soar recently in this year (January) but it was due to the hype that retail investors of reddit had caused. It did provide a strong rally to NAKD’s stock which surged to a whopping 300% in three days but quickly died down.

This is because the external motivator for the positive stock movement could not overcome the underlying weak fundamentals of NAKD. The reason why NAKD stock has not been performing well is because its overall sales have declined and the company reported $15.02 million negative cash flow in 2020 (compared to $9.82 million in 2019).

Shifting towards online business should be good for NAKD business?

The overall resurgence of retail business due to easing of the pandemic lockdown will not benefit the company’s retail subsidiary and Flagship brand, Bendon now that it is focusing on FOH Online.

Furthermore, this growth in the sales of its e-commerce does not compensate the overall loss in the company’s net revenue growth. Several experts of fashion and apparel businesses suggest that the Naked Brand Group (NAKD) may have fallen victim to the harsh and unreasonable trends of fashion industry. The brand simply may have run its course of popularity and consumers do not seem to buy any hype around Naked Brand’s latest fashion trend and marketing.

NAKD stock has a long way to go to start and develop its online e-commerce clout which in the fashion industry can make-or-break due to marketing strategy execution.

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