22nd Oct 2024 16:08
(Alliance News) - Virgin Wines UK PLC on Tuesday returned to profit boosted by improving margins as the cost of attracting new customers fell.
Norwich, England-based Virgin Wines reported a pretax profit GBP1.7 million in the year to June 28, swinging from a loss of GBP0.7 million a year prior. Diluted earnings per share are 2.4 pence compared with losses per share of 1.1p.
Adjusted earnings before interest, tax, depreciation and amortisation jumped 59% to GBP2.8 million from GBP1.8 million as a result of enhanced margins and operational efficiencies, the firm added. Gross margin increased by 230 basis points to 31.9% from 29.6%.
Full-year revenue was unchanged at GBP59.0 million.
Virgin Wines flagged a drop in fully costed cost per acquisition to GBP19.62 from GBP19.91, driven by increased level of "high-quality" customers. Increasing volumes from these new customers is a "key priority" moving into financial 2025, the company added.
Sales through existing customers rose 1.5% despite a difficult market environment, while new customer conversion rates for subscription schemes rose to 55.5% from 49.2%.
Virgin Wines said it remains confident in current market expectations for financial 2025, noting trading in the last four months is in line with market expectations.
Chief Executive Jay Wright said: "Despite a tough consumer backdrop, we are pleased to have increased new customer conversion rates, lowered cancellation rates and delivered a competitive cost per acquisition."
"While the sector remains challenging, demand remains strong for our different subscription schemes and award-winning range of wines."
Virgin Wines is one of the UK's largest direct-to-consumer online wine retailers. It offers nearly 700 different wines and about 150 spirits to an active customer base of more than 170,000.
Shares in the company were 1.3% higher at 38.50 pence in London on Tuesday afternoon.
By Jeremy Cutler, Alliance News reporter
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