Virgin Wines reported a fall in profits and sales in the first quarter of this year after ‘challenges’ over the Christmas trading period.
The online wine subscription service posted revenues of £33.6m for the six months ending 31 December 2022, down from £40.6m in the same period in 2021.
As one of the largest direct to consumer online wine retailers, Virgin Wines UK cited a ‘strong’ performance despite tough trading conditions and said it will be undertaking a full review following the shift in consumer confidence which caused profits to take a hit in the first quarter.
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The group said it was undertaking a full business review to ensure it was “fully leveraging the opportunities available” and to help position itself as “positively as possible for future growth and profitability”.
Virgin Wines also said that against the background of soaring inflation and the cost-of-living crisis, its net cash was down to £7.6m from £7.8m in July 2022.
Additionally, the listed wine seller’s profit before tax was £0.1 million this quarter, down from £3.2 million in 2022.
“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,” chief executive officer at Virgin Wines, Jay Wright said.
“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.
He added: “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.
“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,” Wright commented.
In January, Jay Wright said the company was “disappointed” with its profitability performance as it reported a drop in its half year revenue.
