Virgin Wines warns FY sales will be lower than expected

It now expects sales of around £60m, and underlying pre-tax profit of £0.5m to £1m, with a profitable and cash generative fourth quarter.

Thereafter, the company expects double-digit sales growth in FY24, alongside EBITDA margin of around 4% to 5%, as inflationary pressures - particularly on freight and glass - start to ease.

Virgin Wines said third-quarter trading continued to be affected by a decline in order frequency through the key WineBank customer membership, as customers continued to build their balances rather than spend. It also pointed to an increasingly competitive environment as retailers discounted at aggressive levels to liquidate stock.

On the plus side, however, it said cancellation and conversion rates have started to improve since the end of the first half, while the trade rate has recovered from its low point in November 2022.

Chief executive Jay Wright said: "As previously reported, this financial year has seen an unprecedented range of external and internal challenges impact the business. We anticipated that trading would take some time to settle following our substantial growth during the Covid period, but despite the challenges of the trading environment over the last year, we are proud to have built a business that is circa 50% larger in revenue terms than it was moving into FY20.

"With a record number of WineBank members, deposits at all-time highs, and cancellation and conversion rates trending positively, we are in a good position to benefit from ongoing improvements in the macroeconomic environment, and are optimistic as we look to FY24 and FY25."

At 1050 BST, the shares were down 5.4% at 36.90p.