Virgin Wines has reported an uptick in profit and new customers, as well as a five-year growth plan aiming to triple revenue to £100m by 2029.
The company will also implement a share buyback programme to purchase up to 15 per cent of its share capital, although it will not introduce a dividend.
The AIM-listed company told markets this morning that profit before tax rose 20 per cent to £1.3m in the six months ended December 27, and new customer acquisition rose 29 per cent.
Earnings before interest, tax, depreciation and amortisation (EBITDA) at Virgin Wines were stable at £1.6m.
Revenue ticked down from £34.3m in the first half of last year to £34.1m this year.
“Interims… contain no surprise and have delivered stable revenues, but the growth in new customers is the new news,” Panmure Liberum analysts said.
“If Virgin can grow the base the flywheel of profitability should kick in as the assets and infrastructure of the group get leveraged – this is certainly true of B2B sales and all eyes will be on the quality of the incremental customers the group start to acquire now.”
Analysts rated Virgin Wines’ stock a ‘Buy’.
Cavendish analyst Nigel Parson said: “The business is already picking up momentum after a period of consolidation helped by deep understanding of its target customer.
“Surplus cash will be returned to shareholders through a share buyback programme… Investors with an eye for recovery stories should buy this ‘en primeur’ investment opportunity now, as we believe its share price could double or triple over this period.”
Under Virgin Wines’ strategic growth plan, it will focus on four areas: customer acquisition, commercial partnerships, Warehouse Wines and the development of a mobile app.
Warehouse Wines is a value-driven initiative which sources wines directly from wineries.
It projected revenue to increase to £100m over the duration of the five-year plan.
CEO Jay Wright said: “This is an ambitious and transformational change in our business strategy and investment case, which we are excited to implement over the coming years.”
“Our strategy of acquiring high quality customers at an industry-leading low cost per recruit, while maximising the quality and value of our wines through our unique open-source buying model, continues to position us well to navigate market headwinds.”