Vintage Wine Estates Flags Impairment Charge Of $130-$145 Million

California wine producer Vintage Wine Estates is set to take a non-cash impairment charge of $130-$145 million for its second quarter ended in December. The charge is comprised of approximately $120 million to $130 million in estimated goodwill impairments “driven by changes in performance of certain lines of business in the Wholesale and B2B segments,” as well as an estimated $10 million to $15 million writedown related mainly to “revised expectations of future net sales for the Layer Cake brand and the expected future cash flow from the AceCider business,” according to the company.

The announcement comes following the February news that Vintage is significantly revamping its business less than two years after its IPO. Among its plans are “simplification of the business, focus on key brands, and SKU reductions.” To date, the company says it has made moves to “realize approximately $10 million of annualized profit improvement through a combination of price increases, cost recovery actions, and expense reductions.” To bolster the bottom line, the group has lowered full-time headcount by 4%, strategically raised prices across the DTC segment, is taking pricing on select wholesale brands, and has increased DTC shipping fees over 50% on average.—Daniel Marsteller

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