Profits dip at Virgin Wines

Total revenues were £40.6m in the six months to 31 December, largely unchanged on the same period a year previously. Underlying operating profits fell to £3.4m from £4.1m, while pre-tax profits were £3.2m compared to £3.4m a year earlier.

Subscription memberships increased by 7% during the half to 158,000, while the active customer base - defined as customers who have made a repeat purchase in the last 12 months - grew 9% to 185,000.

Chief executive Jay Wright said: "As expected, the trading environment has evolved considerably over recent months, and given strong prior year comparatives, we have worked hard to maintain encouraging growth from our core sales channels, while maintaining strict discipline around our customers acquisition and our cost control."

Like most online businesses Virgin Wines saw demand strengthen during the pandemic, when many bricks and mortar shops were closed for months at a time.

The AIM-listed firm said the trading environment had been "significantly more challenging" in the first half, while "aggressive" competitor pricing and wider promotional schemes over the Christmas trading period had led to decreased traffic to the website from acquisition activity.

New customers were acquired at an average cost of £13.62 per customer, compared to £12.65 a year previously.

However, Wright remained optimistic, noting: "This result demonstrates the strength of the underlying business model, our discipline in acquiring good quality customers, the reliability of further subscription revenues from a highly engaged customer base and the ability to generate free cashflow.

"The second half has started well. We continue to make progress with our strategic initiatives and remain in line with management expectations."

As at 0915 GMT, shares in Virgin Wines were down 2% at 132.9p.