Virgin Wines confident after solid Christmas period
By Josh White
Date: Wednesday 29 Jan 2025
(Sharecast News) - Virgin Wines reported strong Christmas trading in an update on Wednesday, with revenue rising 6.7% year-on-year in the six weeks ended 27 December.
The AIM-traded firm said December sales increased by 9% compared to the prior year, marking the highest level since the Covid-19 lockdowns.
It attributed the growth to targeted customer acquisition initiatives, strategic marketing, and focussed promotional activity, leading to a 25% increase in new customer sign-ups during the month.
For the first half of the financial year, revenue remained stable at £34.1m, outperforming the online drinks market, which declined by 5%.
Second-quarter sales rose by 2.1% despite subdued consumer confidence following the general election and autumn budget.
Pre-tax profit for the period increased 20% to £1.3m, while EBITDA remained flat at £1.6m despite increased investment in customer acquisition and the company's Warehouse Wines initiative.
Virgin Wines reported a strong balance sheet, with gross cash of £23.7m at the end of the period, up from £17.4m a year earlier, and net cash of £17.3m.
The business remained debt-free, with customer WineBank deposits of £6.4m held in a separate ring-fenced account.
Customer retention also improved, with the rolling 12-month WineBank cancellation rate falling to a record low of 14.9%.
The commercial division continued to expand, with revenue rising 17% year-on-year and by 32% in December.
Virgin Wines said its partnership with Ocado, launched in October, had delivered positive early results, with further commercial opportunities expected.
Warehouse Wines, Virgin Wines' value-focused offering, attracted 17,600 customers and generated £1m in revenue during the first half, with further investment planned.
Operational efficiencies meanwhile helped to mitigate cost pressures, with cost per case reduced by 10.1% over the half-year and 5.4% in December, despite increases in the National Living Wage.
Looking ahead, Virgin Wines said it expected full-year performance to align with market expectations and will outline its growth strategy and capital allocation policy at its interim results in March.
"We are pleased to report an encouraging first-half performance, and particularly strong year-on-year growth of 6.7% over the key six-week Christmas trading period despite the continued sector and macroeconomic headwinds," said chief executive officer Jay Wright.
"We delivered increased levels of new customers, improved our operating cost per case and continued to drive high growth through our Commercial channel."
Wright said the company continued to increase market share on the back of customer loyalty, customer service and the quality of its wines.
"Our strong balance sheet and healthy cash position gives us the opportunity to invest in growth and I look forward to sharing those exciting plans when we come to announce our interim results in March.
"In the meantime, we are confident of delivering a strong second-half performance."
At 0930 GMT, shares in Virgin Wines UK were down 0.66% at 30.3p.
Reporting by Josh White for Sharecast.com.
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