Virgin Wines has reported year-on-year revenue growth across its first half to December 29th, ’23.
Total revenue in H1 2024 was £34.3m (H1 2023: £33.6m), representing 2 per cent YOY growth, with sales to repeat customers up c.5 per cent and commercial revenue up 6.5 per cent. This was achieved despite a subdued consumer economic landscape. In this environment, the business continued to take a disciplined approach to customer acquisition and focused its resources on acquiring high quality new customers. This led to a 22 per cent increase in the new customer conversion rate and a decrease of 14 per cent on the fully costed cost per acquisition.
The Group achieved a significant improvement in profitability during the Period. EBITDA increased by 122 per cent to £1.75m (H1 2023: £0.8m), representing an EBITDA margin of 5.0 per cent (H1 2023: 2.3 per cent), driven by revenue growth, and stringent cost management, with operating variable costs falling by 14.5 per cent year-on-year.
Conversion and cancellation rates continued to improve, with the conversion rate at 50 per cent by the end of December 2023 (2022: 41.1 per cent) and the cancellation rate at 16.8 per cent (2022: 17.8 per cent) for the flagship WineBank scheme. Its new warehouse management system, implemented during the prior year, operated smoothly and drove a warehouse cost per case reduction of 25 per cent during the Period.
The Group has no net borrowings, maintains a strong balance sheet and generated a positive cash return across H1 2024. Gross cash (including Wine Bank Deposits) at the Period end was £17.4m (December 2022: £14.1m and June 2023: £13.5m). Net cash (which excludes Wine Bank Deposits) improved by £3.4m to £11.0m at the Period end (December 2022: £7.6m and June 2023: £5.5m).
Jay Wright, CEO at Virgin Wines, commented: “We are pleased with our performance through the first half of our financial year, particularly our strong profitability despite the challenging trading environment, with EBITDA representing over 5 per cent of revenue. Following operational challenges last year, we made significant improvements in our warehouse operations, achieving a planned reduction in fulfilment costs, while maintaining an excellent next day delivery service throughout the busy peak trading period. We have remained debt free and cash generative, holding £17.4m of gross cash and £11.0m of net cash whilst reducing our inventory levels by 24 per cent YOY.
Our existing customer base continues to be active and loyal, with revenue from repeat sales channels up c.5 per cent YOY and the cancellation rate of our key WineBank subscription base at an 18-month low. Whilst new customer acquisition remains challenging, we have maintained our disciplined approach, and our new Warehouse Wines value offering which launched in late October has had an encouraging initial response. We go into the second half encouraged by our performance and in line with the key drivers behind our business model, whilst remaining mindful of the challenging consumer landscape.”
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