Virgin Wines reports falling turnover and profits but says customers are staying loyal after Covid-19 - The Entrepreneurial Way with A.I.


Saturday, July 30, 2022

Virgin Wines reports falling turnover and profits but says customers are staying loyal after Covid-19


Virgin Wines says customers have stayed loyal beyond the Covid-19 lockdowns in which its business grew strongly. Its turnover and profits both fell, however, compared to the previous year. The retailer suggests, nonetheless, that it’s seeing a long-term shift online in the market.

Its market share has grown at the same time, reaching 8.4% in 2022, from 6.1% in 2021, according to figures from industry benchmark IBISWorld. That, says Virgin Wines in a full-year trading update, is thanks to a loyal customer base, with “resilient” demand for its WineBank subscription and its WineAdvisor service. If won 105,000 new customers over the last year, and more than half (53%) of new customers subsequently subscribed.

The update comes as Virgin Wines, ranked Top500 in RXUK Top500 research, this week says in early figures that it turned over £69m in the year to June 30. That’s 6% behind the £73.6m it reported last time – and 63% ahead of pre-pandemic 2019, when it turned over £42.4m. Earnings before interest, tax and one-off costs (EBITDA) came in at £6.3m, 10% down from £7m a year earlier – and 136% ahead of the £2.3m it reported in 2019.

Virgin Wines has put its focus on customer acquisition while also managing rising costs and supply chain challenges. During the year it spent a below budget average £13.22 on each new customer, while its sales retention rate ran at 91%. In the fourth quarter, customer acquisitions were up 37% on the previous year.  It also says its open-source approach to wine buying, pre-mixing of cases, and a shift towards UK bottling have helped it to manage costs. 

The commercial arm of its business also grew during the year, adding partnerships with Moonpig and Great Western Railway, with new deals set to go live in the current year. 

Virgin Wines chief executive Jay Wright says: “The popularity of our unique consumer propositions, our low customer acquisition costs, our high levels of customer retention and the outstanding quality and value of our wines continue to give us great confidence for the future.

“Our growth, driven by a substantial pipeline of new partnerships to drive increased customer acquisition, will continue in a post-Covid world, and we continue to drive levels of profitability unseen elsewhere in our market sector whilst maintaining our gross margins despite the widely documented global cost pressures. We have increased our market share from 6.1% to 8.4% in the last year, according to industry benchmark IBISWorld and we aim to continue that trend throughout the next 12 months. Our disciplined approach to customer acquisition continues to generate strong returns on investment and our wider strategy and business model continue to position us well to mitigate rising costs and to help us deliver against our growth plans.”

The Norwich-based Virgin Wines pureplay has about 200 employees and works with more than 40 winemakers to supply wine to an active customer base of 17,000 members.

The post Virgin Wines reports falling turnover and profits but says customers are staying loyal after Covid-19 appeared first on Internet Retailing.

via July 30, 2022 at 08:55AM by Chloe Rigby, Khareem Sudlow,