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Acquisition drive spells success for Virgin

Published:  22 January, 2024

Virgin Wines has announced a positive trading update for the six months to 29 December, with year-on-year revenue growth and significant increase in profitability part of the online wine retailers’ H1 2024 performance as it redoubled efforts to pick up new subscribers.

Total revenue for the first six months of the 2024 financial year was £34.3m versus £33.6m for the same period in 2023 – the equivalent of 2% YOY growth. The direct-to-consumer platform also saw an uplift in sales to repeat customers (+5%) and commercial revenue (+6.5%), while EBITDA represented over 5% of revenue.

In particular, the company acknowledged the payoff from its focus on new customer acquisition. ‘Despite a subdued consumer economic landscape’, the company said it was able to pick up momentum via a ‘disciplined approach.... to acquiring high quality new customers’. This led to a 22% increase in the new customer conversion rate and a decrease of 14% on the fully costed cost per acquisition.

CEO Jay Wright said: “Following operational challenges last year, we made significant improvements in our warehouse operations, achieving a planned reduction in fulfillment costs, while maintaining an excellent next day delivery service throughout the busy peak trading period. We have remained debt free and cash generative, holding £17.4m of gross cash and £11.0m of net cash whilst reducing our inventory levels by 24% YOY”.

Overall, it’s a better performance than the one which was announced back in October, when Harpers reported that Virgin – one of the UK’s largest direct-to-consumer online wine retailers – revealed that its audited annual results for the period to 30 June 2023 (FY23) saw revenue fall from £10m on the previous year to £59m, with adjusted pre-tax profit coming in at £0.6m versus £5.2m a year earlier. Meanwhile, adjusted EBITDA declined to £1.8m from a previous £6.2m.

Today, Wright praised the company’s existing customer base which “continues to be active and loyal”, with revenue from repeat sales channels also up circa 5% YOY and the cancellation rate of the key WineBank subscription base at an 18-month low.

Whilst new customer acquisition remains challenging, he acknowledged, he went on to insist that the company has maintained its disciplined approach, with its new Warehouse Wines value offering, which launched in late October, having an encouraging initial response.

“We go into the second half encouraged by our performance and in line with the key drivers behind our business model, whilst remaining mindful of the challenging consumer landscape,” he concluded.