Virgin Wines returns to black as subscription sign ups soar
Virgin Wines has returned to profitability despite a “challenging” backdrop.
The London-listed company reported a pre-tax profit of £1.95m in the 12 months ending June 30, 2024, up from a loss of £430,000 in the year before.
It said its wine subscription service had helped offset higher operating costs.
The wine retailer’s revenue remained “in line” with the previous year at £59m, with enhanced margins and “operational efficiencies”, particularly in warehouse fulfilment, driving the improvement in profitability.
Despite an “inflationary environment and ongoing cost pressures” Virgin Wines increased its gross margins to 31.9 per cent, up from 29.6 per cent in the previous 12 months.
New customer conversion rates on the group’s subscription schemes increased to 55.5 per cent from 49.2 per cent in the year before.
Cancellation rates on its flagship Winebank membership service improved to 16.1 per cent from 17.3 per cent in the previous 12 months.
Virgin Wines CEO Jay Wright said: “I am pleased to report a full-year performance with resilient sales despite a challenging consumer and inflationary market backdrop.
“Demand remains strong for our range of wines and subscription schemes. Our flagship WineBank service was recently recognised as ‘Wine Club of the Year’ at the prestigious International Wine Challenge awards, and over the past 12 months we have seen it deliver increased new customer conversion rates and decreased cancellation rates.
“Our B2B sales continue to grow while our newly launched value proposition, Warehouse Wines, has also delivered encouraging initial results.
“We enter FY25 with the business performing well, and we remain confident for the future due to the strength of the underlying business model, our disciplined cost control and unique sourcing model.”
Analysts at Panmure Liberum hailed the update. The analysts said: “A disciplined approach pays off with a beat to earnings before interest, tax, depreciation and amortisation (EBITDA) and profits.
“KPI’s are improving and provide confidence the core business remains in rude health. New initiatives such as Warehouse Wines are building up well.”