Virgin Wines warns on profit
Virgin Wines has warned on profit after it experienced several operational challenges in the first half of its financial year.
In a trading update, the company said revenue rose by 55% in the period following excellent growth across its subscription schemes. These are a key driver of its direct-to-consumer sales channel which accounted for 82% of total revenue.
Virgin said it faced a number of challenges during the half year such as labour shortages and staff absences caused by the emergence of the Omicron Covid-19 variant, freight disruption and inflationary pressures.
The labour shortages meant that it was forced to cut off Christmas deliveries two days earlier than planned, which negatively affected sales by approximately £800,000. However, the company said it had been largely able to mitigate these pressures through efficient marketing, disciplined customer acquisition and strict control of costs.
Jay Wright, chief executive at Virgin Wines, said: “As expected, the trading environment has evolved considerably over recent months, and given strong prior year comparatives, we have worked hard to maintain encouraging growth from our core sales channels, whilst maintaining strict discipline around our customer acquisition and our cost control. This performance continues to reflect the strength of our award-winning consumer propositions, the ongoing loyalty of our existing customers, the quality of our wines and our growing reputation for outstanding customer service.”
Due to an uncertain trading and macro environment, the company now expects revenue and profit for the year ending June 2022 to be slightly below consensus market estimates.
Wright added: “Despite current headwinds we look forward to the future with optimism. We have a range of leading consumer propositions with more and more people experiencing the benefits of buying delicious, great value wine online through our subscription models. We also have strong growth in our commercial channel and a clear strategy for continued long term, profitable growth.”
