Virgin Wines counts cost of new customer acquisitions as profits fall

The retailer delivered profit before tax of £3.2m, down 5.8% on the previous year, over the six months to December 31.

Sales for the same period stayed broadly in line year on year at £40.6m and were up 55% compared with two years earlier.

Virgin Wines said that its subscription-based revenues rose – up 23% year on year to £26.3m – while subscription memberships rose by 7% to 158,000.

The business has been investing its active customer base, which grew 9% year on year to 185,000.

It also invested in its partnership with Moonpig and launched BeerSave and SpiritSave subscription schemes.

Chief executive Jay Wright said: “As expected, the trading environment has evolved considerably over recent months and, given strong prior year comparatives, we have worked hard to maintain encouraging growth from our core sales channels, whilst maintaining strict discipline around our customer acquisition and our cost control. 

“This result demonstrates the strength of the underlying business model, our discipline in acquiring good quality customers, the reliability of future subscription revenues from a highly engaged customer base and the ability to generate free cashflow as well as our award-winning consumer propositions, the quality of our wines and our outstanding customer service.

“The second half of the year has started well. We continue to make progress with our strategic initiatives and remain in line with management expectations.”