Virgin Wines has announced a rise in profit and new customer acquisitions, alongside a five-year growth strategy aimed at tripling its revenue to £100m by 2029.
The firm also plans to initiate a share buyback programme to acquire up to 15% of its share capital, although it will not be introducing a dividend, as reported by City AM.
The AIM-listed company reported this morning that its pre-tax profit increased by 20% to £1.3m in the six months ending December 27, with new customer acquisition growing by 29%.
Earnings before interest, tax, depreciation and amortisation (EBITDA) at Virgin Wines remained steady at £1.6m.
However, revenue saw a slight decrease from £34.3m in the first half of last year to £34.1m this year. Analysts at Panmure Liberum commented on the interim results: "Interims... contain no surprise and have delivered stable revenues, but the growth in new customers is the new news."
They added: "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 have rated Virgin Wines' stock a 'Buy'
Cavendish analyst Nigel Parson stated: "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."
Virgin Wines has outlined its strategic growth blueprint concentrating on four core segments: customer acquisition, commercial partnerships, the Warehouse Wines scheme, and crafting a bespoke mobile application.
The spirit of Warehouse Wines lies in its cost-effective approach that curates wines directly from the vineyards.
Forecasting a bullish climb in revenue, they anticipate a leap to £100m within a five-year term.
CEO Jay Wright commented on the development, saying: "This is an ambitious and transformational change in our business strategy and investment case, which we are excited to implement over the coming years."
Adding further insight into their manoeuvres, he stated: "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."
