Virgin Wines UK lifts full-year expectations

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Virgin Wines UK PLC (LON:VINO) has raised full-year revenue and profit expectations as its products go down well with new and regular customers alike.

The company, which sells its wine directly to consumers (DTC), said turnover for the year is expected to be no less than £73mln. The online retailer also said it expects to see an improvement in its EBITDA (underlying earnings) margin.

Management said it remains mindful of the potential impact from the easing of lockdown restrictions on consumer spending patterns over the coming months but it remains confident that the underlying growth drivers, which the DTC wine sector is experiencing, alongside the accelerated shift in consumer behaviour towards online retailing, will continue.

“The strong sales momentum delivered in the first half of the financial year has continued into H2 [second half of the financial year] so far. We have been encouraged by the strong customer demand for our wines, alongside growth in our new range of beers and spirits, driven by the ongoing shift in consumer behaviour towards online retailing,” said Jay Wright, the chief executive of Virgin Wines.

“The group remains well-positioned to continue to deliver on our long term growth strategy, underpinned by our unique wine sourcing model and unrivalled consumer propositions, alongside our continued focus on all aspects of the customer experience and growth in our customer base,” he added.

The company’s broker, Liberum Capital Markets responded to the update by increasing its price target to 300p from 280p and reiterating its strong ‘buy’ recommendation.

“The company now expects sales of at least £73mln in FY’21E, 4% ahead of our estimates, and an improvement in EBITDA margin (we upgrade +30bps to 8.6%) which leads to a 9% FY’21E EPS increase. We leave FY’22E estimates unchanged for now mindful of the uncertainty around consumer behaviour as lockdowns ease; however it is likely the group will start FY’22 with a larger customer base than we had expected, new revenue channels continue to perform well and the predictable behaviour patterns until now suggest a confident outlook,” it said.

Shares in Virgin Wines currently trade at 246p, up 3.2% on the day.

 

— adds broker comment and share price reaction —

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