Virgin warns of unexpected losses as consumers feel the pressure

Rising costs and depressed consumer spending power has forced Virgin Wines to lower profit and growth forecasts for the year.

The online wine retailer now expected to fall into the red as the effects of the Iran war combined with increased taxes in the form of duty and packaging levies. Virgin said in a trading update this morning it had proved difficult to offset the rise in costs when partnered with a worsening consumer environment.

The group projected a negative EBITDA of £200k for the full year and a pre-tax loss of £1.5m, compared with £1.6m profit a year ago. It previously guided to remain profitable at EBITDA level. Revenues are expected to come in at £61m, up from £59m in FY25, with a 40% jump in customer numbers year on year.

Shares in the group fell off a cliff as markets opened this morning. The stock plunged almost 20% as investors reacted to the profits warning. It puts the share price at 57% lower over the past year.

Despite the challenges, Virgin said it continued to make good progress with its medium-term growth strategy and was outperforming the rest of the online drinks sector.

The group is aiming to push sales to £100m within five years as part of the plan.

Read more: Virgin Wines boss confident of growth momentum

To help with the growth strategy, Virgin revealed today it had signed a lease for a new warehouse in Preston, which it expected to provide “meaningful” synergies, economies of scale and structural operational benefits from FY28 onwards. It will close its Bolton warehouse as a result.

“We are pleased to have agreed a lease for a new warehouse in Preston, streamlining our operations and providing significant synergies and economies of scale, all funded from our strong cash position,” CEO Jay Wright said.

“Our execution against the key pillars of our growth strategy is delivering encouraging progress, despite that growth now being slightly slower than our original plan due to external market pressures. We are evidencing that the strategy is working, and we remain focused on taking further market share and continuing to invest in our growth channels.

“We have an exceptionally loyal customer base who appreciate the outstanding quality and value of our exclusive wine portfolio and the exceptional levels of customer service we consistently deliver. We look forward to pressing ahead with our growth strategy and delivering on our medium-term goals.”