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(Sharecast News) - Virgin Wines reported modest revenue growth in the first half of its financial year on Tuesday, outperforming a declining online drinks market as customer acquisition and strategic initiatives drove momentum through the key Christmas trading period.
The AIM-traded online wine retailer said revenue rose 2% year-on-year to 34.7m in the six months ended 2 January, compared with 34.1m a year earlier, against an 11% contraction in the wider online drinks market, indicating market share gains.
Trading was stronger over the peak festive period, with revenue in the seven weeks to 26 December increasing 5% year-on-year.
The group maintained a debt-free balance sheet with net cash of 10.6m, down from 17.3m a year earlier, and gross cash of 17.9m.
That came alongside a 2.7m return to shareholders through share buybacks and increased inventory levels ahead of duty rises in February.
Operationally, Virgin Wines delivered strong customer growth, with 75,000 new customers acquired during the period, up 40% year-on-year, while WineBank membership increased 12%.
Customer acquisition costs remained broadly stable at 15.34, reflecting disciplined marketing spend.
The company also reported continued progress across its strategic initiatives.
Revenue from commercial partnerships and corporate gifting grew ahead of expectations, supported by double-digit growth from its partnership with Moonpig.
Warehouse Wines, its value-focused proposition, saw revenue increase 92% year-on-year, with its customer base expanding to 41,100.
Virgin Wines completed the initial phase of its mobile app development, with a soft launch in early March and a full marketing rollout planned, aimed at enhancing customer engagement and supporting longer-term growth.
Trading into the second half remained strong, with revenue up 12% year-on-year across January and February, while customer acquisition accelerated further, rising 54% in January and 83% in February.
Warehouse Wines continued to outperform, delivering revenue growth of 105% over the same two-month period.
The group said it would increase near-term investment in customer acquisition by around 0.55m during the current financial year, while still expecting to remain profitable at the EBITDA level.
Virgin Wines' board acknowledged ongoing macroeconomic uncertainty, including inflationary pressures, rising duties and higher transport and energy costs, but said the business continued to outperform the wider market.
"We are delighted to see that the investment in our growth strategy is working," said chief executive Jay Wright.
"We have delivered a 40% increase in new customers acquired, continued to grow our commercial partnerships, achieved 92% year-on-year growth in our Warehouse Wines value proposition and completed the initial phase of our mobile app development.
"We have entered the second half of the year with strong momentum, keeping our foot firmly on the customer acquisition accelerator, with recruitment up 54% year-on-year in January and 83% year-on-year in February.
"With a strong, debt-free balance sheet and our growth strategy gaining momentum, we will continue to invest in our ambitious plans and remain confident in delivering sustained success."
At 0833 GMT, shares in Virgin Wines UK were down 2.6% at 55.03p.
Reporting by Josh White for Sharecast.com.
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