Virgin Wines has managed to maintain stable revenue and improve profitability in challenging market conditions.
- The company reported a year-on-year revenue of £59m for the year ending 28 June, despite tough trading.
- Pre-tax profits improved significantly to £1.7m from a previous loss of £0.7m.
- Efficiency improvements led to a 59% rise in adjusted EBITDA, reaching £2.8m.
- Virgin Wines’ strategic initiatives have enhanced customer acquisition and retention, contributing to a slight share price increase.
Virgin Wines has successfully navigated the challenging landscape of the wine market by sustaining its revenue at £59 million for the fiscal year ending 28 June, despite a backdrop of economic pressures leading middle-class consumers to scale back on wine purchases. This steadiness in revenue is quite noteworthy given the current cost-of-living crisis.
The company’s pre-tax profit experienced a substantial turnaround, growing from a loss of £0.7 million to a profit of £1.7 million. This improvement is primarily attributed to the firm’s concerted efforts in enhancing operational efficiency and boosting profit margins.
Adjusted EBITDA surged by an impressive 59%, reaching £2.8 million. This significant increase is a result of strategic moves to optimise the company’s cost structure, notably reducing fulfilment expenses, which account for distribution costs, to 11.8% of revenue from 14% the previous year. This optimisation was achieved even with a 10% rise in the national living wage.
A strategic focus on expanding the customer base has been pivotal for Virgin Wines. The introduction of new initiatives, such as Warehouse Wines, a brand refresh, and new collections, has been instrumental in attracting customers at a lower cost. Sales through existing customers witnessed a 1.5% increase, which speaks volumes about the company’s effective customer retention strategies amidst a difficult market environment.
Despite the broader industry’s struggles, the company’s distinct approach, underscored by an open-source buying model and loyal customer base, has facilitated these positive outcomes. Following the announcement of these results, Virgin Wines’ share price observed a modest rise of 1.32%, reflecting market approval.
Jay Wright, the chief executive, expressed satisfaction with these developments, highlighting the company’s success in improving new customer conversion rates and lowering cancellation rates. The firm’s differentiated offerings and strong demand for its subscription schemes are encouraging signs for future growth.
Virgin Wines’ resilience and strategic initiatives underscore its potential for continued growth despite market challenges.
