Virgin Wines hails ‘good Christmas’ as sales and profitability jump

For the six months to December 29, 2023, Virgin Wines reported 2% year-on-year sales growth to £34.3m and a 122% increase in EBITDA to £1.75m, representing a profit margin of 5%, driven by “revenue growth and stringent cost management”.

The business had a 22% increase in new customer conversion rates during the period and a decrease of 14% on “fully costed cost per acquisition”. Sales to repeat customers during the period were up circa 5%.

Conversion and cancellation rates during the period “continued to improve” while the retailer’s new warehouse management system, introduced last year, “operated smoothly and drove a warehouse cost per case reduction of 25%” over the period.

The retailer said its board “remains confident of the group’s prospects in delivering a positive 2024 performance in line with current market expectations”.

Chief executive Jay Wright said: “We are pleased with our performance through the first half of our financial year, particularly our strong profitability despite the challenging trading environment, with EBITDA representing over 5% of revenue.

“Following operational challenges last year, we made significant improvements in our warehouse operations, achieving a planned reduction in fulfilment costs, while maintaining an excellent next-day delivery service throughout the busy peak trading period. We have remained debt-free and cash-generative, holding £17.4m of gross cash and £11.0m of net cash while reducing our inventory levels by 24% YOY.

“Our existing customer base continues to be active and loyal, with revenue from repeat sales channels up circa 5% year on year and the cancellation rate of our key WineBank subscription base at an 18-month low.

“While new customer acquisition remains challenging, we have maintained our disciplined approach and our new Warehouse Wines value offering, which launched in late October has had an encouraging initial response.

“We go into the second half encouraged by our performance and in line with the key drivers behind our business model, while remaining mindful of the challenging consumer landscape.”