REG - Virgin Wines UK PLC - Trading Update

Virgin Wines UKAnnouncement

03/02/2022 07:00

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RNS Number : 5329A  Virgin Wines UK PLC  03 February 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 (THE "EUWA")) ("UK MAR"). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK
MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

Virgin Wines UK plc

 

("Virgin Wines", the "Company" or the "Group")

 

Trading Update

 

Strong performance from existing customers drives growth in subscription based
sales

 

Virgin Wines UK plc (AIM: VINO), one of the UK's largest direct-to-consumer
online wine retailers, today announces a trading update for the six months
ended 31 December 2021 (the "Period").

 

Highlights

 

-    Total revenue of £40.5m, in line with the previous year's
performance and up 55% vs H1 2020 (H1 2020: £26.2m)

-     Repeat sales from core channels of £29.6m, up 6.2% on H1 2021 and
up 59% vs H1 2020

-     Customer base

o  WineBank membership up 11% on H1 2021 and up 41% vs H1 2020

o  Active 1-12 month customer base up 9.5% on H1 2021 and up 46% vs H1 2020

-     Average customer rating maintained at 4.5 out of 5, from over 20k
reviews

-     Net cash position of £13.6m

 

The Group has continued to deliver excellent growth across its subscription
schemes, with customers on its flagship WineBank service performing ahead of
expectations, delivering a 28% increase in revenue. The Group's subscription
schemes are a key driver of its direct-to-consumer ("D2C") sales channel which
represented 82% of total Group revenue in the period. Total subscription
revenue accounted for 79% of D2C sales in the Period, up from 69% in H1 2021.

 

In line with its strategy, the Group has continued to maintain a disciplined
and focused approach to customer acquisition. During the Period customer
acquisition has been more challenging with lower visitor numbers driven
through individual partner offers and a reduction in response from paper-based
activity. This has led to the number of new customers acquired falling below
expectations, but the quality of customer acquired has remained high,
maintaining strong conversion rates, and doing so at low cost which in turn
continues to drive high levels of payback.

 

The commercial arm of the business continues to perform well, trading
significantly ahead of expectations. High profile partnerships with Moonpig,
Virgin Money, Avanti and LNER have all contributed to this strong growth, with
sales in the Period up 25% on H1 2021.

 

Like many businesses, we experienced several operational challenges in the
Period due to well-publicised, external, macroeconomic factors including
labour market shortages caused by the emergence of the Omicron Covid-19
variant, staff absences due to illness/self-isolation, freight disruption and
inflationary pressures. The effect of the labour shortages was that the
business had to 'cut off' for Christmas delivery 2 days earlier than planned
to ensure all customers received their orders, negatively affecting sales by
approximately £800k. However, the Group has largely been able to mitigate
these pressures through highly efficient marketing, disciplined customer
acquisition and strict control of costs.

 

Due to the uncertain trading and macro environment, coupled with numerous
headwinds in relation to increased cost pressure, the Group now expects
revenue and profit for the year ending June 2022 to be slightly below
consensus market estimates.

 

The Group's cash position remains strong, with a net cash balance of £13.6m
at 31 December 2021.

 

 

Jay Wright, Chief Executive Officer at Virgin Wines, 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
performance continues to reflect the strength of our award-winning consumer
propositions, the ongoing loyalty of our existing customers, the quality of
our wines and our growing reputation for outstanding customer service. We are
also pleased to report that the customers acquired during the Covid lockdown
period continue to perform strongly.

 

We were delighted to ship more than 7 million bottles of wine during the
Period and to deliver sizeable growth in our customer base with strong levels
of customer conversion and retention.

 

Despite current headwinds we look forward to the future with optimism. We have
a range of leading consumer propositions with more and more people
experiencing the benefits of buying delicious, great value wine online through
our subscription models. We also have strong growth in our commercial channel
and a clear strategy for continued long term, profitable growth."

 

 

For the purposes of UK MAR the person responsible for arranging the release of
this announcement on behalf of Virgin Wines is Jay Wright, Chief Executive
Officer.  

 

Enquiries:

 

 Virgin Wines UK plc                   Via Hudson Sandler
 Jay Wright, CEO

 Graeme Weir, CFO

 Liberum Capital Limited               Tel: +44 20 3100 2222

 (Nominated Adviser and Sole Broker)
 Clayton Bush

 James Greenwood

 John Fishley

 Christopher Whitaker

 Hudson Sandler                        virginwines@hudsonsandler.com (mailto:virginwines@hudsonsandler.com)

 (Public Relations)                    Tel: +44 20 7796 4133
 Alex Brennan

 Dan de Belder

 Charlotte Cobb

 Nick Moore

 

Notes to editors:

Virgin (https://www.virginwinesplc.co.uk/) Wines
(https://www.virginwinesplc.co.uk/)  is one of the UK's largest
direct-to-consumer online wine retailers. It is an
award-winning business which has a reputation for supplying and curating high quality products, excellent levels of customer
service and innovative ways of retailing.

The Company, which is headquartered in Norwich, UK, was established in 2000 by
the Virgin Group and was subsequently acquired by Direct Wines in 2005 before
being bought out by the Virgin Wines management team, led by CEO Jay Wright
and CFO Graeme Weir, in 2013. It listed on the London Stock Exchange's
Alternative Investment Market (AIM) in 2021.

Virgin Wines has more than 1,000 products in its portfolio and an active
customer base of more than 180,000 worldwide. It has approximately 200
employees and more than 40 trusted winemaking partners and suppliers around
the world.

The Company drives the majority of revenue though its main channels such as
email and web, as well as its growing subscription schemes including WineBank,
Wine Plan and Pay As You Go.

Along with its extensive range of award-winning products, Virgin Wines
continues to grow its beer and spirit categories, successfully launching more
than 40 products as well as its BeerSave and SpiritSave schemes.

https://www.virginwinesplc.co.uk/ (https://www.virginwinesplc.co.uk/)

 

 

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