Virgin Wines profits and sales dropped in the first half, as the cost-of-living crisis exacerbated what the chief executive called “certain internal and operational challenges” over Christmas.

In its interim results for the six months to December 31, 2022, Virgin Wines reported profit before tax of just £0.1m, down from £3.2m, and underlying EBITDA of just £1.4m, down from £3.9m in the same period in 2022.

The retailer also reported total revenues of £33.6m, down from £40.6m for the same period in 2022, and net cash of £7.6m.

Virgin Wines said it acquired more than 60,000 new customers over the period and said recruitment to its WineBank subscription scheme was up 21% year on year, with deposits of £6.5m.

In terms of current trading, the wine specialist said January and February trading was “broadly in line with expectations” with consistently resilient demand among customers.

The retailer also suffered from issues with its new warehouse management system, but these are being rectified. Virgin Wines said it had undertaken a business review to identify new initiatives for future growth and profitability.

The board expects revenue for the financial year to be around £63m, with an EBITDA margin of between 4% and 5%.