Virgin Wines EBITDA hits £2.8m

Online wine retailer Virgin Wines UK has reported a 260% increase in EBITDA to £2.8m, with its profit-before-tax also expected to be £1.95, up from a loss of £430k, for the year ended 30 June 2024. Meanwhile, its revenue was in line with the prior year at £59m (FY23: £59m). The group stated that “enhanced margins and operational efficiencies”, particularly in warehouse fulfilment, drove an improvement in profitability. Despite an inflationary environment and ongoing cost pressures the group increased its gross margins to 31.9% (FY23: 29.6%), driven by the company's sourcing model and strong cost control. New customer conversion rates on the group's subscription schemes also increased to 55.5% (FY23: 49.2%). Similarly, cancellation rates on the company's flagship WineBank membership service improved to 16.1% (FY23: 17.3%). Although customer acquisition continued to be challenging, the rate of acquisition increased throughout Q4 whilst the group maintained its disciplined approach, decreasing the fully costed cost per acquisition to £19.62 (FY23: £19.91). The company's new value proposition, Warehouse Wines, that launched pre-Christmas 2023, has also “started encouragingly” with a particularly strong Q4, and an improving rate of customer acquisition. The business stated that it intends to make increased levels of investment in this key new initiative over FY25 and beyond. Additionally, further to the company's announcement on 30 May 2024 detailing a repurchase of shares and the launch of a share buyback programme), a total of 310,735 ordinary shares in the company have been repurchased. These shares are now held in treasury in anticipation of the future exercise of share options under the company's long term incentive plan and the company has now paused the programme, with the timing of future potential repurchases remaining under active consideration. Jay Wright, chief executive officer at Virgin Wines, said: "I am pleased to report a full-year performance with resilient sales despite a challenging consumer and inflationary market backdrop. Both EBITDA and PBT were ahead of expectations, being significantly up year-on-year due to expanded gross margins and reduced operating variables. “Demand remains strong for our range of wines and subscription schemes. Our flagship WineBank service was recently recognised as 'Wine Club of the Year' at the prestigious International Wine Challenge awards, and over the past 12 months we have seen it deliver increased new customer conversion rates and decreased cancellation rates.” Wright added: “Our B2B sales continue to grow while our newly launched value proposition, Warehouse Wines, has also delivered encouraging initial 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."