Virgin Wines: Revenue flat as it looks to weather bottleneck in market
Online wine seller Virgin Wines has reported flat year-on-year revenue as it searches for ways to acquire loyal customers and increase efficiency in a tough trading environment.
Total revenue remained at £59m in the year ended 28 June, while profit before tax increased by £2.4m to £1.7m, from a loss of £0.7m in 2023.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 59 per cent to £2.8m after a push to make the company more efficient and enhance margins.
It said fulfilment expenses – the sum of distribution costs like packing and shipping – fell to 11.8 per cent of revenue, from 14 per cent last year, despite a 10 per cent increase in the national living wage and ongoing cost pressures.
Gross margins increased by 2.3 per cent to 31.9 per cent, while the e-commerce firm reported net cash of £10.3m, up from £5.5m in 2023, and no debt.
Virgin Wines said it was committed to increasing the volume of new customers at a low cost, with initiatives like the rollout of Warehouse Wines, a “full creative brand refresh” and new collections launched.
Sales through existing customers rose 1.5 per cent, despite a “difficult market environment” the company said.
The difficult market led Virgin Wines’ share price to drop around 75 per cent between late 2021 and early 2023, although it rose 1.32 per cent on today’s results.
Jay Wright, chief executive, said: “Despite a tough consumer backdrop, we are pleased to have increased new customer conversion rates, lowered cancellation rates and delivered a competitive cost per acquisition.
“We have also introduced several strategic initiatives to enhance our growth and are particularly encouraged by the initial results of our Warehouse Wines offering as well as the Vineyard Collection and Five O’clock Somewhere Wine Club.
“While the sector remains challenging, demand remains strong for our different subscription schemes and award-winning range of wines. This differentiated offering, underpinned by our unique open-source buying model and loyal customer base, positions us well to continue delivering growth.
“Looking ahead, and with first-quarter trading being in line with our expectations, we remain confident of delivering a strong outturn in 2025 and beyond.”
Analysts at Panmure Liberum rated the stock a ‘Buy’, adding that it saw “several future growth opportunities that can now be exploited.”