Virgin Wines Reports Resilient Annual Results with Profitability Ahead of Expectations

Medium-term plan: £100m revenue at 7% EBITDA margin

Management set out a five-year ambition to scale to about £100 million of annual revenue on a 7% EBITDA margin. Execution will focus on four levers, each showing traction.

Disciplined customer acquisition at lower unit cost

• Customers acquired up 28% year-on-year with only a 6% increase in spend.
• Cost per acquisition £16.40 (FY24: £16.66); conversion rates “well above 40%”.
• Five-year payback of +4.5 times supports lifetime value economics.

The core WineBank subscription remains a pillar: membership rose 1.5% to 128.3k with an improved cancellation rate of 14.7% (FY24: 16.1%). WineBank delivered £34.5 million of revenue.

Commercial partnerships accelerating

• Commercial revenue up 24% to just under £9 million.
• Ocado is performing strongly; Moonpig partnership expanded.
• Travel partnerships extended with LNER, Avanti and GWR; new opportunities with WH Smith travel sites.

Why it matters: the channel carries lower marketing costs and can scale with relatively fixed infrastructure.

Warehouse Wines: value-led proposition finds its audience

• First full year revenue of £1.8 million, up 484% year-on-year.
• Over 21,500 new customers acquired; more than 31,000 cases sold.
• Targets the £6.99-£8.99 price bracket where supermarket volumes are heavy.

The trade-off is lower percentage margin, but management says the lower marketing and operational costs, plus volume leverage, deliver stronger net contribution.

Technology and app roadmap

• Mobile app on track for H2 2026, aiming to improve engagement via push notifications and reduce reliance on email.
• Ongoing internal review into how technology and AI can streamline operations.

Capital allocation: buybacks now, dividends later

The Board bought back 7.3% of the share base during FY25 for £2.0 million and continues to hold shares in treasury to offset LTIP dilution. With £9.3 million of net cash (excluding ring-fenced WineBank deposits) and no debt, the company is prioritising organic growth investments. A dividend remains under review but is not proposed for FY25.

Current trading FY26: early signs remain supportive

Management says trading is in line with market expectations so far in FY26. In Q1 2026, customer acquisition rose 29% year-on-year, the Commercial channel is growing as planned, and Warehouse Wines revenue jumped 134%. The Board remains confident about delivering on its medium-term plan, despite ongoing cost pressures.

The good, the bad, and what to watch

Positives

• Outperformed a shrinking online drinks market; profits ahead of expectations.
• Strong cash position, debt free, and cash generative after buybacks and duty prepayments.
• Clear growth strategy with measurable levers and early traction, especially in Commercial and Warehouse Wines.
• Operational excellence sustained – cost to serve fell to 11% of revenue.

Watch-outs

• Margins compressed: gross margin 30.1% (FY24: 31.9%); gross product margin 35.6% (FY24: 37.6%) due to duty, EPR and mix.
• Adjusted EBITDA fell to £2.3 million (FY24: £2.8 million) as growth investments stepped up.
• Core D2C sales retention slipped to 88% (FY24: 93%), although WineBank loyalty improved.
• No dividend; returns currently via buybacks and reinvestment.

My take: pragmatic progress with credible levers for growth

This is a steady, execution-led update. Holding revenue flat while the category shrank is a quiet win, and beating profit expectations in that context suggests the “lowest cost to serve” claim has teeth. The shift in mix (more Commercial and Warehouse Wines) may keep percentage margins lower, but if acquisition costs stay efficient – CPA £16.40 and a five-year payback of +4.5x – the model can still compound.

What will move the dial from here? Three things: continued growth in Commercial revenue, sustained efficiency in customer acquisition at or below today’s CPA, and the FY26/27 impact of the app on engagement and frequency. With £17.6 million of cash and no debt, Virgin Wines has the runway to fund that plan. The risks remain largely exogenous – duty and regulatory costs, plus consumer demand – and mix-driven margin dilution. If management can translate volume growth into higher net contribution while keeping costs tight, the £100 million revenue and 7% EBITDA margin target looks achievable.

For now, this is a reassuring set of numbers in a difficult market, with sensible capital allocation and a clear roadmap. One for patient investors who value cash discipline and operational execution over headline growth fireworks.