Virgin Wines reports robust financial growth and market expansion

By James Bayley

Published: 26 July, 2024

Virgin Wines UK has shared its trading update for the year ending 30 June 2024, revealing stable revenue at £59m, matching the previous year’s figure. Improved margins and operational efficiencies, particularly in warehouse fulfilment, significantly boosted profitability.

EBITDA soared by 260% to £2.8m, while profit before tax is expected to reach £1.95m, a substantial turnaround from the £430k loss recorded the previous year.

The balance sheet is in good health, with net cash rising to £10.2m from £5.5m, thanks to strong performance and better inventory management. Including WineBank customer deposits, gross cash stood at £18.3m, and the business remains debt-free.

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Despite facing inflation and cost pressures, the group increased its gross margins to 31.9%, driven by its sourcing model and stringent cost control.

New customer conversion rates for the group’s subscription schemes climbed to 55.5%, while cancellation rates for the flagship WineBank membership improved to 16.1%.

Customer acquisition, though challenging, saw improvement in Q4. The fully costed cost per acquisition decreased slightly to £19.62 from £19.91.

The company’s new value proposition, Warehouse Wines, launched pre-Christmas 2023, performed strongly in Q4 and improved customer acquisition rates. The business plans to invest further in this initiative over FY25 and beyond.

Since announcing a share buyback programme on 30 May 2024, Virgin Wines has repurchased 310,735 ordinary shares, now held in treasury for future share options under the company’s long-term incentive plan. The programme is currently paused, with future repurchases under consideration.

CEO Jay Wright expressed satisfaction with the company’s performance amid challenging market conditions. Both EBITDA and profit before tax surpassed expectations, owing to expanded gross margins and reduced operating costs.

Wright highlighted the strong demand for the company’s range of wines and subscription schemes. The WineBank service, recognised as ‘Wine Club of the Year’ at the International Wine Challenge awards, saw increased new customer conversion rates and decreased cancellation rates. B2B sales and the new Warehouse Wines initiative also yielded positive results.

“We enter FY25 with the business performing well, and we remain confident for the future due to the strength of the underlying business model, our disciplined cost control and unique sourcing model,” Wright concluded.

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