// Virgin Wines issues profit warning, blaming rising cost pressures
// The retailer issued the profit warning despite reporting a 55% increase in sales for the period to £40.5 million
Virgin Wines has issued a profit warning blaming uncertain trading, spiralling inflation and other cost pressures.
In a trading update for the six month period ending December 31, the wine specialist said it expected both profits and sales to be lower than consensus for the financial year to June due to “uncertain trading and macro environment, coupled with numerous headwinds in relation to increased cost pressure”.
The retailer issued the profit warning despite reporting a 55% increase in sales for the period to £40.5 million.
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Repeat sales from core channels was up 6.2% year-on-year to £29.6m, while Virgin Wines reported an 11% increase in its WineBank membership. Total subscription sales accounted for 79% of all D2C sales in the period.
The retailer finished the period with a net cash position of £13.6 million.
Virgin Wines chief exeucitve Jay Wright 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. We are also pleased to report that the customers acquired during the Covid lockdown period continue to perform strongly.
“We were delighted to ship more than 7 million bottles of wine during the Period and to deliver sizeable growth in our customer base with strong levels of customer conversion and retention.
“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.”
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