Virgin Wines

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Underlying profits have more than doubled at Virgin Wines UK in the first half as the DTC group implemented a turnaround strategy.

Revenues in the half to 29 December 2023 increased 2% to £34.3m, while underlying EBITDA rose 122% to £1.8m.

The group said it was confident it would meet profit expectations for the full year in spite of cost and consumer pressures.

Shares in Virgin Wines jumped 10% to 41.8p as a result.

The group added its new value proposition Warehouse Wines had showed “encouraging” early results, new customer conversion rate was up 22% year on year and its WineBank subscription scheme experienced an 18-month low cancellation rate of 16.8%.

Virgin Wines also cut costs in the half, with a 14% reduction in recruiting new customers, a 24% reduction in inventory levels, a new warehouse management system and a 25% fall in warehouse fulfilment costs per case.

CEO Jay Wright said: “We are pleased to report a positive first half performance, with the underlying business performing well including through the peak Christmas period, and the introduction of our key strategic initiatives better positioning the company to achieve further growth into the future.

“Our customer base remains active and loyal, with cancellation rates continuing to trend positively despite macroeconomic uncertainties.”

He added: “Looking ahead, we remain optimistic about the future prospects of the group. Warehouse Wines, our new proposition, has delivered encouraging early results, bringing in almost 2,000 previously ‘lapsed’ customers, and we have received positive feedback on our brand refresh. We expect a full year profit for 2024 in line with market expectations and continue to look at opportunities to continue our growth trajectory moving forward.”

Morning update

Spirits group Distil has agreed a new partnership with Global Brands to supply UK off-trade customers.

Global Brands will service Distil’s UK grocery, cash & carry and convenience customers effective immediately.

Executive chairman Don Goulding said: “Global Brands has strong relationships with major grocery customers thanks to the national distribution of its own brands - which include VK, Hooch, and Franklin & Sons - in this channel and has demonstrated a keen understanding of Distil’s brands and ambitions.”

The FTSE 100 opened flat at 7,932pts this morning.

Early risers alongside Virgin Wines included rival online wine operator Naked Wines, which increased 3% to 56.7p.

THG was among the fallers, down 2.7% to 61.2p.

This week in the City

There are a few scheduled updates in the lead up to the Easter bank holiday weekend.

Irn-Bru maker AG Barr and posh mixer group Fever-Tree will report full-year results tomorrow. Ocado is also set to update the market on its Q1 trading on Tuesday, while the latest monthly Kantar grocery sales figures are also out.

Over in the US, Walgreens Boots will publish Q2 results on Thursday afternoon, which could bring an update on the rumoured Boots IPO.

Asda and Morrisons are both due to put out Q4 and Q1 results respectively before the end of the month, but no date is scheduled.