Online wine retailer, Virgin Wines, has issued a profit warning attributing spiralling inflationary, uncertain trading and other cost pressures.
In a trading update for the six months ended 31 December 2021, the retailer said its expectations of both profits and sales are to be lower than consensus for the financial year to June, as a result of “uncertain trading and macro environment, coupled with numerous headwinds in relation to increased cost pressure”.
Despite reporting a 55% increase in sales to £40.5 million for the three month period, the retailer issued a profit warning.
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Repeat sales from its core channels increased by 6.2% year-on-year to £29.6 million, while Virgin Wines reported an 11% increase in its WineBank membership.
Virgin Wines also reported total subscription sales accounted for 79% of all D2C sales in the period and finished the period with a net cash position of £13.6 million.
“As expected, the trading environment has evolved considerably over recent months, and given strong prior year comparatives, we have worked hard to maintain encouraging growth from our core sales channels, whilst maintaining strict discipline around our customer acquisition and our cost control,” Virgin Wines chief executive Jay Wright said.
“This performance continues to reflect the strength of our award-winning consumer propositions, the ongoing loyalty of our existing customers, the quality of our wines and our growing reputation for outstanding customer service. We are also pleased to report that the customers acquired during the Covid lockdown period continue to perform strongly.
“We were delighted to ship more than seven million bottles of wine during the period and to deliver sizeable growth in our customer base with strong levels of customer conversion and retention.”
Wright added: “Despite current headwinds we look forward to the future with optimism. We have a range of leading consumer propositions with more and more people experiencing the benefits of buying delicious, great value wine online through our subscription models.
“We also have strong growth in our commercial channel and a clear strategy for continued long term, profitable growth.”
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