Virgin Wines boosted by significant improvement in profitability
Online retailer Virgin Wines UK has reported a significant improvement in first half profitability.
In the six months to 29 December, EBITDA increased by 122% to £1.75 million driven by revenue growth and strict cost management initiatives.
Meanwhile, total revenue grew to £34.3 million from £33.6 million a year earlier as sales to repeat customers rose by around 5%. Commercial revenue was also up, rising by 6.5%.
During the period, Virgin Wines continued to take a disciplined approach to customer acquisition and focused its resources on acquiring high quality new customers. This led to a 22% increase in the new customer conversion rate and a decrease of 14% on the fully costed cost per acquisition.
Jay Wright, chief executive at Virgin Wines, said: “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% of revenue.
“Following operational challenges last year, we made significant improvements in our warehouse operations, achieving a planned reduction in fulfillment costs, while maintaining an excellent next day delivery service throughout the busy peak trading period.”
Virgin Wines said it remains confident that its full year performance will be in line with current market expectations.
Wright added: “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.”