Online wine retailer Virgin Wines UK has reported a positive full-year performance for its financial year 2024 with adjusted EBITDA up 59%, to £2.8 million (€3.4 million).
The increase in EBITDA was driven by enhanced margins and operational efficiencies, the company noted.
The company's fulfilment costs decreased to 11.8% of revenue (FY23: 14%), despite a 10% increase in the national living wage and ongoing cost pressures.
It also achieved a 50% reduction in costs associated with customer returns and refunds with improved warehouse accuracy.
While total revenue for the year remained flat at £59 million (€70.8 million), gross profit was up 8% year on year to £18.8 million (€22.6 million).
Gross margin increased by 230 bps to 31.9%, as it benefitted from the company's sourcing model, cost control measures, and favourable sales channel mix.
Jay Wright, chief executive officer, added, "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.
"We have also introduced several strategic initiatives to enhance our growth and are particularly encouraged by the initial results of our Warehouse Wines offering as well as the Vineyard Collection and Five O'clock Somewhere Wine Club."
Annual Highlights
Virgin Wines UK focused on driving new customer acquisition at a lower cost. The cost per recruit fell to £19.62 (FY23: £19.91), driven by an increased level of high-quality customers.
The company considers it a key priority to increase the volume of new customers for the financial year 2025.
It has also implemented a host of strategic initiatives, such as the launch of Warehouse Wines, which saw a strong fourth quarter.
The company has completed a creative brand refresh with a rollout underway across various channels.
Elsewhere, it has launched the bespoke Vineyard Collection and premium Australian Five O'clock Somewhere Wine Club with positive customer feedback.
Sales via existing customers increased 1.5% despite a difficult market environment, while new customer conversion rates for subscription schemes rose to 55.5% from 49.2% in 2023.
Customer deposits through its flagship membership service, WineBank, hit a record level of over £9 million pre-Christmas, with a seasonal high of £8 million (€9.6 million) by year-end.
Outlook
Virgin Wines UK is optimistic about its financial year 2025, and expects first-quarter trading in line with expectations.
Wright added, "While the sector remains challenging, demand remains strong for our different subscription schemes and award-winning range of wines.
"This differentiated offering, underpinned by our unique open-source buying model and loyal customer base, positions us well to continue delivering growth."
