Online specialist Virgin WInes anticipates flat sales and lower margins in its current financial year as tough trading conditions take a toll.

Virgin Wines website

Virgin Wines expects tough conditions this year

Virgin Wines reported a decline in revenues for last year to July 1, when earnings were flat, and expects performance this year to be affected by pressure on consumer finances and costs.

Although profits reached £5.1m last year, versus £1.7m the year before,  after adjusting for exceptional costs in the prior year “profit before tax was virtually unchanged”. Group revenue edged down to £69.2m from £73.6m.

Virgin said: “Looking ahead, there will continue to be pressure on consumers’ disposable income and as such we are mindful of the potential impact on frequency of order and average order values. However, as consumer spending comes under pressure, we are also aware that people are more likely to stay in and socialise at home rather than taking the more expensive option of going out.” The retailer expects sales this year to be “relatively resilient” and “broadly flat”.

The retailer also said: “Whilst we continue to deliver sector leading EBITDA margins and are confident in our ability to mitigate a number of the margin pressures we face, there are certain costs which we have not been able to offset”. EBITDA margins of approximately 8% are now anticipated, rather than 9%.

Chief executive Jay Wright said: “In the context of a severe cost-of-living crisis, we believe that our wines represent an affordable treat compared to the cost of alternative options such as going to pubs and restaurants, and therefore we may see more people opting to socialise and drink wine at home in the coming months.

“We remain confident in the fundamentals of our business, with our emphasis on commercial opportunities through new and expanded strategic partnerships already delivering significant benefits. Our focus on high-quality, exclusive wines and award-winning service to our loyal customers will continue to be our key priority.”

• Sign up for our daily morning briefing to get the latest retail news and analysis