Virgin Wines, the online wine retailer, has reported a steady year-on-year revenue as it explores strategies to attract loyal customers and enhance efficiency amidst challenging trading conditions.
The company's total revenue remained at £59m for the year ending 28 June, while pre-tax profit saw an increase of £2.4m to £1.7m, recovering from a loss of £0.7m in 2023, as reported by .
Adjusted EBITDA witnessed a 59 per cent rise to £2.8m, following efforts to improve the firm's efficiency and boost margins.
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The company reported that fulfilment expenses, which include distribution costs such as packing and shipping, dropped to 11.8 per cent of revenue from 14 per cent last year. This was despite a 10 per cent hike in the national living wage and ongoing cost pressures.
Gross margins saw a 2.3 per cent increase to 31.9 per cent. The e-commerce company also reported a net cash position of £10.3m, a significant increase from £5.5m in 2023, with no debt.
Virgin Wines expressed its commitment to increasing the number of new customers at a low cost, with initiatives like the introduction of Warehouse Wines, a comprehensive brand refresh, and the launch of new collections.
Sales through existing customers increased by 1.5 per cent, despite what the company described as a "difficult market environment".
The wine market has faced challenges during the cost-of-living crisis and beyond, as middle-class consumers have cut back on wine purchases.
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These market difficulties led to a roughly 75 per cent drop in Virgin Wines' share price between late 2021 and early 2023. However, the company's shares rose 1.32 per cent following the announcement of these results.
Jay Wright, chief executive, commented: "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 first-quarter trading being in line with our expectations, we remain confident of delivering a strong outturn in 2025 and beyond."
Panmure Liberum analysts have rated the stock as 'Buy', noting "several future growth opportunities that can now be exploited."