C
hristmas proved rough for Virgin Wines, and the business revealed on Tuesday that a worsening economy had added to its operational woes over the busy period.
The business said it had lost around £1.5 million in revenue because it had to cut off Christmas sales a week earlier than usual.
The decision was taken because the wine retailer was having problems with the software which it uses to manage its two warehouses.
But that was not the only problem. The cold snap that snuck in across the UK in December also created challenges, as did the widespread postal strikes during the month.
Chief executive Jay Wright said: “As previously announced in our year-end trading update, profitability was impacted during the first half, with a number of macroeconomic headwinds exacerbating certain internal and operational challenges which we encountered particularly over our peak Christmas trading period.”
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We are currently undertaking a full business review to ensure… we are positioned as positively as possible for future growth and profitability
The company’s pre-tax profit was almost obliterated, hitting just £90,000 in the six months to the end of December from £3.2 million the year before. It came as revenue also dropped off significantly, falling by 17% to £33.6 million.
Shares fell by around a 10th as Virgin Wines said it was launching a full review of its business.
It said consumer confidence has shifted significantly over the past 15 months compared to where it was during the pandemic, when lockdown helped delivery-based companies.
The company said: “The business is currently undertaking a full business review to ensure we are fully leveraging the opportunities available to us and that we are positioned as positively as possible for future growth and profitability.”
The business has managed to start to resolve the warehouse problems. At the moment, more than 97% of orders placed before 4pm are dispatched the same day.
