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Virgin Wines UK is trading in line with expectations, as the under-pressure DTC retailer is set to report falling revenues and profits, according to a full-year trading update.
The group said pre-tax profits for the year ended 30 June 2023 were expected to come in at £500k on sales of £59m, which compared to profits of just more than £5m and revenues of almost £70m in 2021/22.
It comes after Virgin lowered its forecasts in May after being stung by “an increasingly competitive environment”. The group also launched a full business review in March as its half-year figures plunged.
This morning, Virgin said it was making “good progress” on new initiatives to accelerate its strategic development following the recent partnership deal struck with WH Smith’s travel division.
CEO Jay Wright added: “Despite the inflationary environment, we have delivered results in line with expectations.
“We have successfully maintained our disciplined approach to customer acquisition, conversion and cancellation rates are trending positively, and our flagship WineBank scheme continues to be resilient in challenging market conditions.”
Virgin reported an additional 90,000 new customers had been acquired during the year at an average cost of £12 each - an improvement of 9.2% year on year.
“Looking ahead, we remain confident in the underlying business model and opportunities for future growth into FY 2024 and beyond,” Wright said.
“We are well-positioned due to the uniquely sourced, high-quality nature of our wines, coupled with our market-leading expertise and strong foundations, and look forward to sharing more details on our strategic initiatives at the full-year results.”
Shares in the business jumped 3.5% to 30p this morning but remain down 60% in the year to date.
Morning update
Danone and Carlsberg are weighing up their options after the Russian government took temporary control of the group’s operations in the country.
Danone Russia and Carlsberg’s Baltika Breweries are now under temporary management of the Russian Federal Agency for State Property Management after a predential decree was signed by Vladimir Putin.
Danone said it had “taken note” of the decision and was preparing to take “all necessary measures” to protect its rights as shareholder of Danone Russia.
Carlsberg added it had not received any official information from the Russian authorities regarding the presidential decree or the consequences for Baltika Breweries.
“The Carlsberg Group has been operating in accordance with local rules and regulations in Russia and finds this development unexpected,” the Danish brewer said. “The group will assess the legal and operational consequences of this development and take all necessary actions in response.”
In June, Carlsberg signed an agreement to sell its Russian business but this morning said the prospects for the process was “highly uncertain”.
In October, Danone launched a process to transfer control of its essential dairy and plant-based (EDP) business in Russia, which, it said, was progressing “according to the expected schedule”.
The FTSE 100 opened flat this morning at 7,433.13pts.
Early risers, alonsgide Virgin Wines UK, included Bakkavor, up 4.2% to 98.2p, Nichols, up 3.5% to 1,045p, and Hilton Food Group, up 1.2% to 657.8p.
Ocado was among the early fallers ahead of its results tomorrow, down 3.5% to 573.8p.
This week in the City
Tomorrow morning is looking busy as Ocado publishes its interims and Kantar releases the latest grocery market share data.
All eyes will be on the ONS on Wednesday as the government body puts out the latest UK inflation figures. A trading statement is also scheduled from bakery group Finsbury Food.
Premier Foods updates the market on Q1 trading ahead of its AGM on Thursday.
The week ends with the postponed Naked Wine full-year results, the latest consumer confidence index from GfK and June’s retail sales from the ONS.
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