Virgin Wines issued a profit warning today, blaming an uncertain trading and macro environment, coupled with “numerous headwinds” in relation to increased cost pressure.
In a trading update for the six month period to 31 December 2021, the online retailer said it now expects both profits and sales to be lower than consensus for its full financial year to June.
The downbeat outlook came despite the business posting a 55% surge in sales to £40.5m over the period. This was driven by its subscription schemes which are a key driver of its direct-to-consumer (DTC) sales channel that represented 82% of total group revenues.
Repeat sales from core channels were up 6.2% year-on-year to £29.6m. Virgin Wines highlighted that it had seen an 11% increase in its WineBank membership, which has now risen 46% in the last couple of years, driven by demand for deliveries during the pandemic.
Virgin Wines Chief Executive Jay Wright said: “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.
“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 7 million bottles of wine during the Period and to deliver sizeable growth in our customer base with strong levels of customer conversion and retention.
“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.”
