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Shares of Crimson Wine Group, Ltd. CWGL have gained 3.1% since reporting results for the first quarter of 2025. This compares with the S&P 500 index’s 3.9% rally over the same time frame. Over the past month, the stock has risen 4.3% compared with the S&P 500’s 11.4% growth.
Crimson Wine Group reported net sales of $14.5 million for the first quarter ended March 31, 2025, down 9% from $15.9 million a year ago. The company’s net loss widened to $0.9 million, or 5 cents per diluted share, from $0.6 million, or 3 cents per diluted share, in the prior-year period. The decline in revenues primarily stemmed from a 14% drop in wholesale sales and modest softness in the direct-to-consumer channel. Total gross profit fell 14% year over year to $6.6 million, and the company’s gross margin declined by two percentage points to 46%.
Other Key Business Metrics
Within segment performance, wholesale net sales decreased $1.2 million year over year to $7.9 million due to reduced domestic shipments and a sharp decline in exports, particularly to Canada and Europe. The export business faced headwinds from retaliatory trade measures, resulting in the suspension of shipments to Canada late in the quarter.
Direct-to-consumer (DTC) sales, which include wine club memberships, e-commerce, and tasting room revenues, were relatively flat at $6 million. A slight decline in wine club revenues was mostly offset by stronger e-commerce sales, buoyed by targeted promotions and improved customer database utilization. The gross margin in the DTC channel improved 89 basis points to 66%, supported by a favorable product mix emphasizing higher-priced wines.
The “Other” category, comprising bulk wine and grape sales, custom winemaking services, and non-wine retail, experienced a 20% year-over-year revenue decline to $0.6 million. This segment posted a gross loss of $0.6 million, reversing a modest gross profit in the prior year. The loss stemmed largely from a $0.8-million inventory write-down, more than triple the write-down recorded in the year-ago period.
Management Commentary
Management attributed the decline in wholesale sales to shifting distributor purchasing patterns and elevated inventory levels at the distributor level. The company emphasized that the softness in the channel does not necessarily reflect end-market demand, but rather inventory management efforts by wholesalers.
On the direct-to-consumer front, executives pointed to Ecommerce momentum and enhanced promotional strategies as positive takeaways for the quarter. However, they acknowledged modest churn in wine club memberships, which they continued to monitor closely.