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‘Strong momentum’ at Virgin Wines despite subdued consumer landscape
UK wine e-tailer Virgin Wines has reported a “significant” increase in profitability for the first half of the year, despite the subdued economic landscape.
The company which sells wine direct to the consumer online, said the positive performance included year-on-year revenue growth of 2% to £34.3 million, up from £33.6 million in the same period last year. Profitability was also improved, with earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 122% to £1.75million compared to £0.8m in the first half of 2023, pushing the EBITDA margin up to 5%, up from 2.3% in the same time period last year. )
Sales to repeat customers grew by around 5%, it said due to its “active and loyal” existing customer base, with conversion rates of new customers improving, up to 50% by the end of December 2023, compared to 41.1% in the same period the previous year. Cancellation rate of its key WineBank subscription base were also at an 18-month low of 16.8%.
There was a strong focus on acquiring new “high quality” customers, it noted, which has led to a 22% increase in the new customer conversion rate and a decrease of 14% on the fully costed cost per acquisition.
Chief executive Jay Wright, said he was pleased with the performance, particularly the strong profitability despite the challenging trading environment which he said came off the back of operational challenges last year, including significant improvements in the warehouse operations which drove a warehouse cost per case reduction of 25% during the six-month period. This achieved “a planned reduction in fulfillment costs, while maintaining an excellent next day delivery service throughout the busy peak trading period,” he noted
“Whilst new customer acquisition remains challenging, we have maintained our disciplined approach, and our new Warehouse Wines value offering which launched in late October has had 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.”
“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% year-on-year,” he added.