Virgin Wines UK has announced its annual results for the year ending 28 June 2024, showcasing a marked improvement in profitability despite a flat revenue and challenging market conditions.
The company reported a stable total revenue of £59m, consistent with the previous year. However, profitability saw significant gains, with adjusted EBITDA rising by 59% to £2.8m, compared to £1.8m last year. This improvement was driven by enhanced operational efficiencies and cost management, which also contributed to an increase in profit before tax (PBT) to £1.7m, a notable turnaround from the £0.7m loss recorded in the prior period. Gross margins improved to 31.9%, up from 29.6%, reflecting the benefits of Virgin's cost control measures and product sourcing strategy.
Virgin Wines’ balance sheet remains robust, with a net cash position of £10.3m, doubling from last year, and the business continues to operate debt-free. The company attributes these positive financial outcomes to streamlined fulfilment processes and effective cost optimisation.
Virgin Wines focused on strategic initiatives to enhance its market position. The launch of the Warehouse Wines brand has been particularly promising, with over 8,000 customers now engaged with this value-driven offering. The company also introduced new premium products, including the bespoke Vineyard Collection and the Five O’clock Somewhere Wine Club, which have received positive feedback from customers.
Additionally, the company has worked to maintain a low cost per customer acquisition, reducing it to £19.62, a slight decrease from last year’s figure. However, a competitive market has made it difficult to scale new customer acquisitions at the same rate as before. Despite this, Virgin Wines saw a 1.5% increase in sales from repeat customers, highlighting strong customer loyalty.
Operational gains were a key focus, with the business reducing fulfilment costs to 11.8% of revenue, down from 14% last year, despite broader inflationary pressures. Improved warehouse accuracy also led to a 50% reduction in return and refund costs, further boosting profitability.
Looking forward, Virgin Wines remains cautiously optimistic. The company expects its new initiatives, particularly Warehouse Wines and its recently secured partnership with Ocado, to drive growth in the coming year.
CEO Jay Wright said in a closing statement: “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. We have also introduced several strategic initiatives to enhance our growth and are particularly encouraged by the initial results of our 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 Q1 trading being in line with our expectations, we remain confident of delivering a strong outturn in 2025 and beyond.”