Virgin Wines profit tumbles, full business review launched

Virgin Wines posted a slump in interim profits on Tuesday as revenue fell and the company announced a full business review, as it pointed to a challenging backdrop.

In the six months to the end of December 2022, pre-tax profit tumbled to £0.1m from £3.2m the year before, with revenues down to £33.6m from £40.6m.

"We continue to see adverse trading conditions and challenges impacting the sector, with well-documented inflationary pressures and cost of living issues affecting consumer spend and frequency of order," it said.

The group was also affected by a number of one-off factors, including over the two weeks of mourning following the passing of Queen Elizabeth II in September and the peak Christmas trading period.

"Internally, this involved teething problems with the implementation of our new Warehouse Management System (WMS) to support the operation of our two warehouses, and externally we saw the negative effects on the courier network following the postal strikes and bad weather leading up to Christmas," it explained.

The company is now undertaking a full business review to ensure it is "fully leveraging the opportunities available" to it and that it is "positioned as positively as possible for future growth and profitability". It cited the shift in consumer confidence over the past 15 months, macro challenges, and the changes experienced across its trading environment versus what it experienced during the pandemic.

Virgin Wines said trading in January and February was broadly in line with expectations, with "consistently resilient demand among loyal customers".

It continues to expect FY23 revenues of around £63m and an EBITDA margin of between 4% and 5%.

At 0915 GMT, the shares were down 9.5% at 43.90p.