Very app, new customers & category growth drive Shop Direct performance

  • Very.co.uk revenue increased 7.1% to £1,488.1m, driving Group revenue growth of 1.8% to £1,993.4m
  • Group EBITDA grew 3.3% to £271.0m
  • Very customers increased 5.7% to 2.98m, boosting Group customers by 0.7% to 4.05m
  • Very app orders up 22.9%, reflecting 29.5% of total Very orders
  • Strong sales growth in categories including smart tech (12.9%) and sportswear (11.8%)
  • Significant increase in customer satisfaction with a record Net Promoter Score (NPS)

Shop Direct, which operates online retail brands Very.co.uk, Littlewoods.com and Littlewoods.ie, today announces its full year results for the 52 weeks ended 30 June 2019. These figures are unaudited pending finalisation of the accounts. This is not expected to have any bearing on the numbers presented today.

Henry Birch, group chief executive at Shop Direct, said:

“We are pleased to deliver another set of strong underlying results despite a challenging retail environment and the changing economic backdrop.

“Continued growth in our lead brand Very, driven by new customers, a rise in app-based orders, and expansion in categories such as sportswear and smart tech, has increased Group revenue and EBITDA. We have strengthened our leadership team with several new executive appointments, continued to invest in our technology and infrastructure and, through an even greater focus on our customers, delivered a record NPS score.

“The economic landscape is likely to remain unpredictable in the months ahead but we are confident that our successful and resilient business model, which offers customers the brands they love across numerous categories combined with flexible ways to pay, means we will continue to perform well.

“The next phase of our evolution will be as The Very Group. The rebrand, which will happen later this year, will bring our corporate identity in line with our flagship retail brand, helping us to attract and retain more of the best people and giving our business even greater momentum.”

Financial highlights

  • Group revenue grew 1.8% to £1,993.4m (FY18: £1,958.8m)
  • Group EBITDA increased 3.3% to £271.0m (FY18: £262.3m)
  • Very revenue grew 7.1% to £1,488.1m (FY18: £1,389.1m)
    • Underpinned by 5.7% increase in Very customers to 2.98m (FY18: 2.82m), boosting Group customers by 0.7% to 4.05m (FY18: 4.02m)
  • Littlewoods revenue decline slowed at -11.3% to £505.3m (FY18: -14.5% to £569.7m)
  • Group gross margin rate broadly consistent with prior year at 39.6% (FY18: 39.9%)
    • Improved underlying retail margin rates driven by strong full price performance was offset by the financial services contribution, which was impacted by lower warranty volumes
  • Average debtor book grew 0.9% to £1,665.8m (FY18: £1,651.5m
  • Bad debt declined 0.2ppts to 7.0% of the debtor book (FY18: 7.2%), as a result of proactive risk management, continued focus on responsible lending and improvements in collections strategy
  • Operating profit before exceptional items increased 0.7% to £226.2m (FY18: £224.6m)
  • Statutory loss before tax of £185.5m (FY18: loss before tax of £24.7m), driven by exceptional items of £310.2m, including a provision of £241.0m to cover customer redress relating to historical shopping insurance sales, following an unexpected surge in claims submitted ahead of the August 2019 deadline. The company is currently evaluating a number of funding options to meet this additional liability

Operational highlights

Continued product growth and evolution

  • Sales growth across a number of product categories, including:
    • Clothing and footwear (2.9%), with sportswear the standout category (11.8%)
    • Electrical (1.2%) driven by smart tech and mobiles (12.9% and 7.5% respectively)
    • Seasonal (2.6%) underpinned by a strategic focus on toys, in which Shop Direct grew market share by 0.9ppts compared to the previous year
  • Home and furniture retail sales decline improved significantly at -1.7% (FY18: -9.5%), returning to growth in the second half of the year
    • Driven by improved product ranges, availability and stock health plus investment in pay per click marketing
  • Successful migration of Very Exclusive to Very in January 2019, resulting in increased premium and luxury fashion sales year-on-year. The move made luxury brands such as Kenzo, Alexander McQueen and Vivienne Westwood more accessible to Very customers

Mobile-first strategy

  • Orders placed via the Very app increased 22.9% year-on-year to represent 29.5% of total Very orders across all devices (FY18: 25.4% of total orders)
    • Very app conversion rate of 4.6% was higher than through other sales channels (3.1%)
  • Total Group sales via mobile devices increased 5ppts year-on-year to 79% of total online sales

Innovation to improve customer experience

  • Record Net Promoter Score (NPS), the industry measure of customer advocacy, driven by continued improvements in customer outcomes, including the launch of Shop Direct’s customer closeness team
    • The team helped to increase first contact resolution rate to 70% from 49% in FY18
    • Call centre contact declined 33% year-on-year as more customers opted for digital self-serve options like Very’s AI-powered chatbot, Very Assistant
  • Continued to develop advanced credit decisioning technology using a broader and more diverse selection of customer data to make faster, more accurate credit decisions
    • This has enabled implementation of dynamic authorisations, enhancing Shop Direct’s customer order authorisation strategy by using near real time bureau updates in decisioning

Strengthened executive and non-executive teams

  • Strengthened the executive team with the appointments of Tommy Jordan as financial services CEO, Andy Burton as chief technology officer and the promotion of Sarah Willett to chief people officer
  • Appointed Jacqui Humphries and Mark McMenemy as non-executive directors

New fulfilment centre on track

  • Completed construction of the external shell of Skygate, Shop Direct’s new 850,000 sq ft distribution and returns centre at East Midlands Gateway, which will be operational in 2020
  • As part of the development of the Group’s fulfilment operations, the Raven Mill site in Greater Manchester transferred to Clipper Logistics, along with all returns activity managed from the site. The deal safeguarded up to 200 jobs and the future of the property

ENDS

CONTACT INFORMATION

Media enquiries

Brunswick Group       Eilis Murphy / Sam Chienne       020 7404 5959

About Shop Direct

As the UK’s largest integrated pureplay digital retailer and financial services provider, Shop Direct has annual sales of £2bn.

Later this year, the business will rebrand to The Very Group as part of plans to bring its name and identity in line with its largest and fastest growing retail brand Very.co.uk.

Shop Direct’s other retail brands are Littlewoods.com and LittlewoodsIreland.ie. The company receives an average of 1.5m website visits every day, with 79% of online sales completed on mobile devices.

Shop Direct exists to make good things easily accessible to more people. With its multi-category range of famous brands, market-leading technology and data capabilities and unique financial services products offering flexible ways to pay, the Group is well placed to deliver on that promise.

The company sells more than 1,900 famous brands, including big name labels and its own brands. Shop Direct has 4.05m customers and delivers 49m products every year. Its free click-and-collect service, CollectPlus, delivers to 7,000 stores across the country, increasing ease and convenience for customers.

For more information on Shop Direct, visit www.shopdirect.comor follow the company on Twitter at @ShopDirect.