Virgin Wines (LSE: VINO) expressed optimism today, projecting robust sales growth and improved profit margins for the upcoming year despite facing significant challenges in the past fiscal period. The online wine retailer unveiled plans to combat previous setbacks, aiming for a promising future amidst volatile market conditions.

Shares in Virgin Wines saw an 11% decline, settling at 36.38 pence on Wednesday afternoon in London, marking a 27% dip over the past year. The company grappled with financial woes in the fiscal year ending June 30, suffering a pre-tax loss of £737,000 compared to a £5.1 million profit the previous year. Revenues dropped by 15% to £59.0 million, while administrative expenses surged by 37% to £6.0 million.

The challenges were exacerbated by a £990,000 exceptional cost attributed to issues arising from the implementation of a new warehouse management system. Despite these setbacks, Virgin Wines’ CEO, Jay Wright, remains hopeful, emphasising the positive aspects of the company’s performance.

“FY23 has been a year affected by a number of challenges, from well-documented macroeconomic headwinds to a number of one-off, exceptional issues, most specifically relating to the implementation of our new warehouse management system in H1,” remarked CEO Jay Wright. “Despite this, we have continued to grow our WineBank membership, maintain excellent discipline in our customer acquisition channel and deliver a healthy balance sheet.”

However, the company’s recent quarterly report for the first quarter of financial 2024 showed a promising 12% increase in sales. Virgin Wines anticipates sustained double-digit sales growth throughout the new fiscal year. The optimism is fuelled by the positive impact of their warehouse management system, which is steadily reducing operational costs.

Looking ahead, Virgin Wines aims for an Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) margin between 4% and 5%, as inflationary pressures ease, especially concerning freight and glass costs. This projection marks a significant improvement from the adjusted EBITDA margin of 3.0% reported in financial 2023, which had notably narrowed from 9.0% in financial 2022.