Virgin Wines posts profit upturn as it warns of oncoming crisis

Virgin Wines has said that its profits before tax rose to £5.1m for the year ended 1 July 2022, up from £1.7m in 2021.

While group revenues fell year-on-year from £73.6m to £69.2m, it remains 63% above pre-pandemic levels three years ago.

Meanwhile the group’s cash balance was down from £15.7m to £15.1m.

Going forward, the company said there will continue to be pressure on consumers’ disposable income and as such it is “mindful of the potential impact on frequency of order and average order values. It said it also expects top line performance will be relatively resilient and therefore now expect revenue growth to be broadly flat for FY23”.

Jay Wright, chief executive officer, said: “Despite widely documented macroeconomic challenges and consumer uncertainty, Virgin Wines has continued to show its resilience and strong positioning in the direct-to-consumer online wine retail sector. Our business model and disciplined approach to new customer acquisitions has enabled us to retain much of the substantial growth achieved during the Covid-19 lockdowns, with almost 1 million cases sold in FY22, and we remain market-leading both in terms of our customer proposition and our profitability.

“In the context of a severe cost of living crisis, we also believe that our wines represent an affordable treat compared to the cost of alternative options such as going to pubs and restaurants, and therefore we may see more people opting to socialise and drink wine at home in the coming months.”

He added: “We remain confident in the fundamentals of our business, with our emphasis on commercial opportunities through new and expanded strategic partnerships already delivering significant benefits. Our focus on high-quality, exclusive wines and award-winning service to our loyal customers will continue to be our key priority.”