Virgin Wines earnings surge on steady full-year revenue

Virgin Wines UK reported steady full-year revenue in its annual report on Tuesday, at £59m, unchanged from the prior year, while adjusted EBITDA surged 59% to £2.8m, driven by improved margins and operational efficiencies.

The AIM-traded wine retailer said gross profit also rose, by 8% to £18.8m, as profit before tax increased to £1.7m, swinging from a loss of £0.7m in the 2023 financial year.

Gross margins improved by 230 basis points to 31.9%, supported by strong cost controls and a favourable sales channel mix.

Virgin Wines maintained a strong cash position, with balances increasing by £4.9m to £18.4m, and a net cash balance of £10.3m, leaving the company debt-free.

The firm highlighted a disciplined approach to new customer acquisition, with cost per recruit slightly reduced to £19.62, while customer loyalty remained high, with a 1.5% increase in sales from existing customers.

Subscription scheme conversion rates improved to 55.5%, and customer deposits in the flagship WineBank service hit a record level of over £9m pre-Christmas.

Strategic initiatives were a key driver of growth, the board explained, with the launch of Warehouse Wines delivering strong results in the fourth quarter, and the introduction of new products such as the bespoke Vineyard Collection and the premium Five O'clock Somewhere Wine Club.

Operational efficiencies also played a significant role, reducing fulfilment costs and improving warehouse accuracy, contributing to £1.4m in annualised savings.

Looking ahead, Virgin Wines said it was confident in its outlook for 2025, underpinned by a resilient business model, a loyal customer base, and growth initiatives such as its new partnership with Ocado, which would provide access to a broader customer base.

Trading in the last four months had been in line with expectations, with the company expecting Warehouse Wines to be a significant growth driver moving forward.

“In July we announced our 2024 Trading Update with both EBITDA and profit before tax ahead of expectations,” said chief executive officer Jay Wright.

“Today we are delighted to reiterate a positive full year performance, with strong profitability.

“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.”

Wright noted that the company had also introduced several strategic initiatives to enhance growth, adding that it was “particularly encouraged” by the initial results of its 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.”

At 0925 BST, shares in Virgin Wines were up 1.32% at 38.5p.

Reporting by Josh White for Sharecast.com.