CWG: Crimson Wine Reports Modest Y/Y Sales & Margin Growth in 2024

In This Article: Shares of Crimson Wine Group, Ltd. CWGL have gained 0.4% since reporting results for 2024. This compares favorably with the S&P 500 index's 1.2% decline over the same period. Over the past month, CWGL shares have inched up 0.3%, outperforming the broader market's 5.3% pullback. Revenue & Profitability See Modest Gains Crimson Wine reported 2024 earnings per share of 4 cents, down from 15 cents in the prior year. For the year ended Dec. 31, 2024, CWGL reported total net sales of $72.99 million, a 1% increase from $72.40 million in 2023. The modest top-line rise was led by a 2% increase in direct-to-consumer (DTC) sales and a 1% uptick in wholesale revenues. Other revenue streams, including bulk wine and grape sales, declined 4%. Gross profit improved 4% to $35.05 million from $33.68 million in the prior year. The company reported a wholesale gross profit of $16.25 million (up 8%), with a margin expansion of 300 basis points to 40% - a result of a higher-priced wine mix and lower-cost vintages. DTC gross profit was flat at $18.11 million, though the margin contracted slightly to 65% from 66%. Other gross profit rose 18%, benefiting from lower inventory write-downs. Operating income rose to $0.87 million from $2.01 million in 2023 but was impacted by higher operating expenses. Other Key Business Metrics Total cases shipped in 2024 reached approximately 408,000, a 3% increase from 396,000 cases shipped in 2023. Despite this growth in shipment volume, bottled cases decreased to 466,000 from 475,000. Inventory remained robust, with 0.9 million cases of wine in various stages of the aging process as of year-end, supporting future sales across channels. Wholesale accounted for 52% of net sales, while DTC comprised 38%. Within the DTC segment, wine clubs represented 58% of sales, tasting rooms 25% and e-commerce 17%. The company's focus on expanding e-commerce and enhancing tasting room experiences helped partially offset a decline in wine club membership. The 2024 harvest yielded 1,388 tons of estate fruit, holding steady at 2.9 tons per acre, consistent with the company's seven-year average. Estate grapes accounted for 21% of CWGL's grape supply, with the remainder sourced from approximately 85 independent growers. Management Commentary CEO Jennifer Locke emphasized the company's strategic priorities centered on margin enhancement, sustainability and operational optimization. Crimson Wine continues to invest in its core brands and direct-to-consumer infrastructure while managing cost pressures. Locke highlighted strong brand performance, particularly from Seghesio's 2022 Sonoma County Zinfandel, which was named Wine Spectator's 2024 Wine Value of the Year. Management noted the importance of lifestyle branding and national promotional efforts to drive awareness and deepen customer engagement. Factors Influencing Headline Numbers Several factors shaped Crimson Wine's 2024 financial performance. Notably, increased sales taxes, higher depreciation expenses, compensation and professional fees contributed to a 12% increase in general and administrative expenses. Sales and marketing expenses rose 5% due to higher compensation and marketing spend. Other income declined 54% year over year to $1.05 million due in large part to a reduced wildfire-related settlement payout ($0.3 million in 2024 versus $1.9 million in 2023). This decline overshadowed gains from increased investment income in a higher-rate environment. Inventory write-downs were stable at $0.9 million, and interest expenses saw a modest improvement as outstanding term loan balances continued to decline. Crimson Wine ended the year with $16.6 million in total debt and no borrowings under its $60-million revolving credit facility. Guidance Management reiterated its intention to maintain stable or improving profit margins through disciplined cost control, operational efficiencies and direct-to-consumer growth. The company also indicated plans to continue upgrading facilities for energy and water resiliency and emphasized climate risk mitigation efforts as ongoing capital priorities. Other Developments Crimson Wine continued to execute its $2-million share repurchase program, buying back 389,299 shares in 2024 for $2.4 million at an average price of $6.02 per share. As of Dec. 31, 2024, 1.2 million shares remained authorized for repurchase under the plan, which is set to expire on Dec. 31, 2026. In summary, Crimson Wine delivered stable financial results in 2024 amid inflationary pressures and a challenged consumer backdrop. Its disciplined approach to expense management and emphasis on direct-to-consumer engagement helped support profitability and marginal stock outperformance relative to broader market trends. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Crimson Wine Group Ltd. (CWGL): Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research