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Virgin Wines has launched a full review of the business after profits tumbled to £0.1m in its half-year results, down from £3.2m the prior year, as the business was hit by challenges “particularly” over the peak Christmas trading period.
In the six months ended 31 December 2022, total revenues were £33.6m, down from £40.6m in H1 22, while underlying EBITDA also fell, hitting £1.m down from £3.9m.
Following its results, a business review is now underway to “identify new initiatives for future growth and profitability”. The group said the shift in consumer confidence over the past 15 months, current macro challenges, and the changes experienced across its trading environment versus that experienced during the Covid period are all reasons for the review.
At the start of this half-year, January and February trading has been broadly in line with expectations. Nonetheless, the group said it will continue to be disciplined with its marketing investment, focusing on low cost recruitment and maximising value from the existing customer base.
Looking ahead, it expects revenue for FY23 to be around £63m, full-year EBITDA margin to be between 4% and 5%, and EBITDA margin excluding exceptional factors to be 2% higher, in the range of 6-7%.
Jay Wright, CEO at Virgin Wines, said: “As previously announced in our year-end trading update, profitability was impacted during the first half, with a number of macroeconomic headwinds exacerbating certain internal and operational challenges which we encountered particularly over our peak Christmas trading period.
“However, we continue to make progress on addressing the challenges where we can, and we remain confident in the future growth prospects of Virgin Wines. This is underpinned by the fundamental strength of our business model and consumer proposition, with our customers remaining loyal and ever-increasing numbers signing up to our WineBank subscription scheme.”
He added: “Furthermore, our exciting new strategic partnerships continue to be a key focus in helping to introduce our brand’s unique, high-quality products and service to new customers every day.
“The growth in our WineBank membership and continued focus on low cost customer acquisition, disciplined cost control, maximising gross margins and optimising working capital to maximise free cash flow, places us in an advantageous position to capitalise on opportunities as the cost of living crisis eases.”
