Scheid Vineyards reported strong sales – $30.7 million vs. $22.7 million a year earlier for the six months ended Aug. 31. But those strong sales weren't enough to overcome a sharp jump in the cost of sales which pushed the firm to a loss of $1.4 million from a year earlier profit of $12.6 million.
"Overall revenues increased 35% in the first six months of fiscal 2023. Cased goods sales increased 32%, bulk wine sales increased 28%, and winery processing and storage revenues increased 112% from the previous year. Gross margins increased from 20% in the 2021 period to 23% in 2022," said Mike Thomsen, CFO. Margins increased primarily due to changes in product mix and were partially offset by increases in material costs, he added.
Sales and marketing expenses increased 29%, from $5.1 to $6.6 million, as the Company continued its investment in the marketing of new brands and territories. Such expenses were 22% of total revenues for both periods.
Scott Scheid, President/CEO, said, "The 2022 grape harvest began in mid-August and is expected to be completed in late October. This timing is approximately two weeks ahead of a normal harvest season for wine grape vineyards on the Central Coast, due primarily to a record heat wave that affected all of California in early September. We are currently approximately 80% complete with harvest and, primarily as a result of the heat wave, overall yields appear to be trending at a rate 15% lower than the Company's five-year average yields. These yields appear consistent with those from all wine grapes grown in the California coastal regions."