Virgin Wines UK PLC Announces New Warehouse and Resilient Trading Despite Challenging Markets

That looks sensible to me. Running fulfilment across two sites can add complexity, duplicated costs and transport inefficiencies, so consolidating into one warehouse should make the model cleaner.

The company says this move should create meaningful synergies, economies of scale and structural operational benefits from FY28 onwards. In plain English, it expects the bigger single-site set-up to be cheaper and more efficient over time.

There is a cost to get there, though. The warehouse build and fit-out will be completed during FY27, with around £0.7 million of exceptional operating costs and around £1.6 million of increased capital expenditure, or capex.

Capex is money spent on long-term assets like buildings, systems or equipment rather than day-to-day running costs. So investors should expect some near-term spend before any benefit shows up properly in the numbers.

Balance sheet strength makes the warehouse investment less risky

One reassuring point is funding. Virgin Wines says it remains debt free and will fund the new warehouse investment through existing cash reserves.

That is important because warehouse projects can become awkward if a company has to stretch its balance sheet. Virgin Wines is saying it does not need to do that, and it also makes clear that WineBank cash balances are ringfenced and are not being used for capex.

That ringfencing point matters. WineBank is a core customer proposition, so investors will want confidence that customer-related cash is not being dipped into for infrastructure spending.

Virgin Wines growth strategy: customer wins, commercial partnerships and app progress

Under the bonnet, there is actually quite a lot to like in this update. Management says it expects to deliver over 40% growth in customers acquired across the Group for FY26, which suggests marketing spend is still bringing new people through the door.

The company also says it has secured substantial new commercial partnerships and a new supply channel into UK sports stadiums. That sounds promising, although the names of those partnerships and the likely revenue contribution are not disclosed.

Existing partnerships with Moonpig and Ocado are still performing well, with double-digit revenue growth. That is a positive signal because it shows Virgin Wines is not relying on just one route to market.

There is also some encouraging progress in digital. The new mobile app launched on time and on budget, with approximately 13,000 downloads in April and May.

On its own, 13,000 downloads does not tell you whether the app will be a major earnings driver. But it does show management is delivering projects as planned, and that matters for credibility.

Warehouse Wines, the group’s value-focused offer, is expected to deliver FY26 revenue growth of 90% year-on-year. That is a strong number and suggests the lower-priced proposition is landing well with customers in a strained consumer market.

Why Virgin Wines says the market is tough – and why investors should believe it

Management is pretty clear about the backdrop. Consumer confidence and discretionary spending remain under pressure, and the company says that has worsened further due to the effects of the war in the Middle East.

On top of that, Virgin Wines highlights increased duty and EPR as cost pressures. Duty is tax on alcohol, while EPR refers to Extended Producer Responsibility, a policy that increases packaging-related costs for producers and retailers.

The company says it has worked hard to mitigate these cost increases, but not fully. That feels believable, and it helps explain why revenue can grow while profitability still disappoints.

The quarterly trend is worth noting too. Sales moved from Q1 at -4.5% to Q2 at +5% and Q3 at +8%, which shows momentum improved as the year went on.

That is a good sign. It suggests the strategy is gaining traction, even if the external cost and consumer environment is preventing a cleaner profit outcome.

What this Virgin Wines RNS means for shareholders

My take is that this is operationally positive but financially a bit frustrating. The warehouse move looks smart, the growth channels appear to be working, and market share gains in a declining sector are not easy to dismiss.

But investors cannot ignore the guidance miss. A move from expected EBITDA of £100,000 to a loss of £200,000, alongside revenue guidance below consensus, tells you the near-term recovery is slower than hoped.

The good news is that this does not read like a business under serious stress. It is debt free, still investing, and still seeing improving sales momentum quarter by quarter.

The less good news is that shareholders may need patience. Management is asking the market to look through FY26 pressure and focus on FY28 operational benefits, stronger growth channels and a rebound in underlying profitability.

That may prove the right call, but it is still a promise rather than a delivered result today. For now, I would class this update as cautiously encouraging on strategy, but modestly negative on near-term earnings.

Bottom line on Virgin Wines’ trading update

• Revenue is still growing, with FY26 expected at c. £61 million.
• Profit expectations have weakened, with EBITDA now seen at -£200,000 and PBT at -£1.5 million.
• The new Preston warehouse could improve efficiency and margins from FY28 onwards.
• Customer acquisition, partnerships, the app and Warehouse Wines all show genuine progress.
• The balance sheet remains a support, with no debt and warehouse investment funded from cash.

If you are a shareholder, the key question is simple: do you believe Virgin Wines can turn today’s growth investments into stronger profits over the next couple of years? This update does not settle that debate, but it does give management a fair case to make.