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Virgin Wine maintains positive momentum as Naked Wines stabilises

Online wine merchant Virgin Wine has reported strong Christmas trading, while subscription Naked Wines’ “solid” performance, though still down, appears to have stabilised.  

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Virgin Wines celebrated a “highly encouraging performance”, noting in particular a 25% jump in the number of customers during December, which it said had been underpinned by strategic marketing and promotional activity.

Revenues during the Christmas period (the 6 weeks to 27 December 2024) increased by 6.7% year-on-year, with sales in December up 9% compared to the previous year – the highest level since the pandemic.

It also noted “further operational efficiencies and a healthy balance sheet” which it said signalled positive momentum.

Overall, revenue over the first half of the year remained broadly in line with the same period last year at £34.1 million compared to £34.3m in the same period last year, with EBITDA for the period remaining unchanged from last year at £1.6m, despite the increase in investment in acquiring new customer and its Warehouse Wines value proposition, which was launched in early 2024. Meanwhile, profit before tax increased by 20% year-on-year it said, to £1.3m.

Warehouse Wines – which sells wines for under £10 wines –  generated around £1m of profit, it noted, with 17,600 customers. This is expected to grow and will see further investment, it said.

Its commercial channel also delivered growth, with revenues up 17% over the year, and 32% in December alone. A strategic partnership with Ocado, which was launched in October helped deliver “positive early results”, it said, and there would be further opportunities with commercial partners imminently.

It also noted a “clear market opportunity” to consolidate its position in the UK market.

“Our strong balance sheet and healthy cash position gives us the opportunity to invest in growth and I look forward to sharing those exciting plans when we come to announce our interim results in March, chief executive officer Jay Wright said. “In the meantime, we are confident of delivering a strong H2 performance.”

Stabilising the ship?

However, the picture was not as rosy at Naked Wines, although admittedly its losses were less than the similar period last year.

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It called the peak season trading “solid” and in line with expectations, with revenue down by 8.9%. However, this is something of a stabilisation from last year’s result, which saw revenues fall -14.3% in the half year.

Active members (those with Angel or Wine Genie membership) were down by 10%, it added, down from -12% in the previous half year, although the retention of core members (members who had been with the company for 24 months) had slightly improved, up from 70 to 81%. Meanwhile, the revenue per member was also up by 2% year-on-year, which Naked Wines said reflected improvements in order frequency and average order value.

In terms of its cash position, net cash continued to improve to £30m, up £26m on the prior year, or £7m on HY25.

The ongoing downsizing of the inventory had helped to boost cash generation by around £47m from the previous year (or £23m on the half year), bringing the closing position to £116m. The company’s management is set on continuing to “right-size” the inventory, which it warned could impact inventory liquidation costs and may lead to EBIT falling at the lower end of current guidance.

CEO Rodrigo Maza, who was appointed to the role in February having joined the company as UK managing director in September 2023, said the company remained pleased with its performance during the important peak season, calling it “solid” and featuring “improving trends and positive signals from KPIs supported by our strategic initiatives and testing plan.”

“We are tracking in line with full-year expectations, and look forward to providing a further update in March, including a plan focused on shareholder value creation,” he said.

In December, Naked Wines issued a performance review after sales fell 15% in the first half of the year to £112.3 million saying that a performance review is underway, in order to “proactively evaluate options to maximise shareholder value”. However, Maza said the company was in a better position both financially and strategically with “robust financial foundations” and members who remained loyal and engaged.

 

 

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