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Profits and share price dip at Virgin Wines
Profits at Virgin Wines dipped in the first half of the year, after a rocky six months for the online wine retailer, which has seen its share price fall to its lowest level since listing publicly a year ago.
The company recorded total group revenues of £40.6 million in the first half of the year, which it said were comparable to 2020, and up 55% on the pre-pandemic half year to 31 December 2019.
Profits before tax were 0.2m down compared to the same period last year, at £3.2m, and EBITDA (earnings before interest, taxes, depreciation, and amortization) also fell to £3.7m. down from £4.5m in the same period last year. The company attributed to increased investment in new customer acquisition and additional operating costs as a listed business.
Earnings per share were also lower having fallen from 6p in the first half of 2021, to 4.6p over the first half
However, Virgin Wine’s chief executive officer Jay Wright said that the second half of the year had started well, and the company was making line with its own expectations and making progress on its strategic initiatives.
He noted that while the trading environment had “evolved considerably” in recent months, and although the company had strong comparatives from the previous year, it had worked hard to “maintain encouraging growth from our core sales channels, whilst maintaining strict discipline around our customer acquisition and our cost control”.
Revenue from subscriptions rose 23% to to £26.3m, compared to £21.4m in the same period last year, with the number of subscription memberships up by 7% to 158,000 during the first half of the year, and a more active customer base.
Meanwhile net cash was recorded at £13.6m, up £5.2m since 30 June 2021, and there were new partnership with Moonpig, driving sales in the commercial channel and the launch of new subscription services, BeerSave and SpiritSave.
“This result demonstrates the strength of the underlying business model, our discipline in acquiring good quality customers, the reliability of future subscription revenues from a highly engaged customer base and the ability to generate free cashflow as well as our award-winning consumer propositions, the quality of our wines and our outstanding customer service,” Wright said.
Share prices
The disappointing results comes after the company’s shares plummeted by almost 23% in early February, following a trading statement from Virgin Wines that lowered its full-year sales and profit expectations amid “uncertain trading” and “numerous headwinds in relation to increased cost pressure”, and problems over the company’s Christmas deliveries, which were struck by the Omicron variant. Share prices fell from 200p to 155p on 3 February, cutting the company’s valuation to around £85 million, before coming to rest as low as 130p in early March.
Shares are now valued at 132.9p, putting the company’s value at £74.21million
Virgin Wines listed its shares at 197p each on London’s Alternative Investment Market (AIM), the lightly regulated exchange for smaller companies, in February 2021, following a record year, which valued the company at £110m.
In November, Wright hailed 2021 as a ‘transformational year’ for the company, which saw group revenues rise 30% from £56.6 million in FY2020 to £73.6 million in the year to 30 June 2021 – an overall increase of 73% on the 2019 financial year.