// Virgin Wines sees profits and sales decline despite its subscription based revenue growing 23%
// Overall revenue at the wine retailer was in line with late 2020 expectations
Virgin Wines has reported a dip in both profits and sales as it battles shifting consumer habits.
With spiralling inflation continuing to rise and soaring bill prices, UK consumers are increasingly holding back when it comes to splurging on non-necessities, including wine.
Pre-tax profit at Virgin Wines, shrunk to £3.2 million in the six months to December 31, from £3.4 million the prior year. The retailer, a subsidiary of the Virgin Group, said profits were hit due to an increased investment in customer acquisition along with the additional operating costs that come with it being a listed company following its IPO last year.
The retailer made £40.6 million of total sales, which it said was in line with the year previous, however this is up 55% on a two-year basis, pre-pandemic.
Despite the stagnant sales growth, subscription based sales rose 23% to £26.3 million year on year. Virgin Wines said this gave it a reliable source of future revenue. It increased its subscribers by 7% to 158,000 over the half.
The wine retailer highlighted the partnership it secured with online card maker Moonpig in September last year, which it expects will boost sales.
Virgin Wines chief exeutive 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 result demonstrates the strength of the underlying business model, our discipline in acquiring good quality customers, the reliability of future subscription revenues from a highly engaged customer base and the ability to generate free cashflow as well as our award-winning consumer propositions, the quality of our wines and our outstanding customer service.
“The second half of the year has started well. We continue to make progress with our strategic initiatives and remain in line with management expectations.”