Virgin Wines UK PLC (AIM:VINO) shares fell 14% to 28.8p after the online wine retailer forecast a loss for the 2026 financial year and announced investment in a new warehouse.
The company said it expects revenue of about £61 million, up around 4%, for the year to 3 July, with a swing to a pre-tax loss of about £1.5 million from a profit of £1.6 million a year earlier.
On an EBITDA basis, it guided to around a £200,000 loss, from £2.3 million earnings last time.
Higher alcohol duty, extended producer responsibility costs and weak consumer confidence were said to have weighed on profitability despite improving sales trends through the year.
However, the top-line performance improved from a 4.5% decline in the first quarter to growth of 5% in the second quarter and 8% in the third quarter.
The group also signed a lease for a new warehouse in Preston, which will replace its Bolton facility by February 2027. The project is expected to cost about £700,000 in exceptional operating expenses and £1.6 million in capital expenditure.
Customer acquisitions are expected to rise by more than 40% this year, while Warehouse Wines is on track to deliver revenue growth of 90%.
Jay Wright, chief executive, said: "Our execution against the key pillars of our growth strategy is delivering encouraging progress, despite that growth now being slightly slower than our original plan due to external market pressures."
The company said it remained debt free and would fund the warehouse investment from existing cash reserves.
Analyst Wayne Brown at Panmure Liberum said: "Virgin Wines continues to make progress against its medium-term strategy, albeit more slowly than planned, and has today trimmed its FY'26E sales and profit outlook following softer demand post the outbreak of the Middle East conflict."
He said new customer acquisition, Warehouse Wines growth and new commercial partnerships support his 10% 2027 revenue growth forecast, "though conversion of new customers into repeat purchasers at historic rates will be key"
An enterprise value of just £10 million excluding leases and customer deposits means "the valuation does not reflect a well-run business with an improving outlook", Brown said, though cutting his target price to 65p from 85p.
