Record profits as digital transformation accelerates
Shop Direct, the UK’s second biggest online pureplay retailer, with the digital department stores Very.co.uk, Littlewoods.com and VeryExclusive.co.uk, has announced a third consecutive year of record profits for the financial year ending June 30, 2015.
The retailer has grown profits by 78% to £71.7m, in a year that has seen the company take significant strides to becoming a world-class digital retailer.
The profit surge was driven by sales growth, a successful move to being a 100% digital retailer and better discipline across selling, costs and credit risk.
The year has seen the retailer making some bold decisions, culling the catalogue and closing legacy brands Woolworths, K&Co and Isme. Being a pureplay retailer has given Shop Direct the freedom to invest in its digital transformation, while at the same time allowing it to return a profit for the third year in a row.
SURGE IN PROFITS
- Group sales up 3% to £1.8bn (2013/14: £1.7bn)
- Very.co.uk delivered sales growth of 21.1% with more than £850m in sales
- Very.co.uk mobile device sales growing +51%
- Very.co.uk mobile sales are 59% of total online sales, which is 17 points ahead of the market
- Web traffic has now broken the 1 million per day mark, landing on a resilient and stable site
- Profit Before Tax (PBT) growth of 78% to £71.7m (2013/14: £40.4m, itself a record year)
- Driven by a combination of strong sales growth and greater discipline, including better selling, lower operating costs and less bad debt from credit customers
BRANDS, BIG DATA AND PERSONALISATION ARE KEY
- Very.co.uk is the UK’s fastest growing department store with an unbeatable range of famous brands
- 1,100 famous brands and 70,000 lines now on offer across clothing, footwear, electrical, home, furniture and seasonal, which includes gifts, beauty and toys
- 180+ new brands including River Island, Sonos, Miss Selfridge and Bang & Olufsen
- Exceptional customer understanding
- Investment in Big Data is now paying back
- The capacity to conduct 100 tests a month in a custom-built user experience lab
- Testing that is fuelled by advanced funnel analytics
- Delivers to each customer an experience that is as unique as she is
- Personalised digital experience across the end to end journey, personalising; the marketing that brings her in, the shop she then enters and the communications after she’s shopped
SIGNIFICANT MILESTONES PASSED TO FUEL FUTURE GROWTH
- Time called on catalogues, creating a fully digital shopping experience
- Catalogue production ended after more than 80 years
- Only 3 years ago 72% of sales were from catalogue customers. Now it is 0%
- Shop Direct is now dedicated to digital with 100% of resources focussed on progress in this area
- Sharper focus on Very.co.uk and Littlewoods.com with the closure of Woolworths, Isme and K&Co
- The customer transition has been seamless
- The number of customers shopping and the amount of product being purchased has exceeded expectations. This is down to the improved range of brands, different ways to pay and ease of the online experience
- Successful launch of VeryExclusive.co.uk in February 2015 – democratising luxury fashion
- The new etailer has 150+ accessible and high street luxury labels such as Vivienne Westwood, Marc by Marc Jacobs and Reiss
- New labels on board for A/W15 include LK Bennett, Kenzo and Paul Smith
COMMENTING ON THE RESULTS, ALEX BALDOCK, GROUP CEO, SAID:
“This has been a big year for Shop Direct. I’m happy to announce profits are up 78% to £71.7m, and I’m especially pleased that in our third year running of record profits, we have also accelerated our digital transformation.
“Very.co.uk and mobile have been the outstanding performers for us. We’re working hard to keep our lead in m-commerce, and Very is now the UK’s fastest growing department store. This is now a disciplined business too, in the way we sell, spend and lend, which makes for a more profitable and resilient Shop Direct.
“We passed some important milestones last year. We called time on the catalogue, and we are now a pureplay retailer dedicated to digital. We’ve transformed quickly to this more focused business – only three years ago, nearly three-quarters of our sales were from catalogue customers.
“We’re also more focused on Very.co.uk and Littlewoods.com, made possible by the closure of our three smaller brands.
“Being online-only means more mobile innovation, especially in personalisation where we aim to offer each customer an experience as unique as she is. We’ve tailored her online experience, including the marketing that brings her in, the online shop she then enters, and the way we engage with her after she’s bought. Our investment in Big Data and technology has started to pay off and is making these new levels of personalisation possible.
“Four months in, we’ve made a strong start to the new financial year too. We’re in good shape for the peak Christmas period, and we expect growth, discipline and transformation to drive another record year.
“That said, we’re nowhere near the finished article and we’ve only scratched the surface of the full potential here. The competition is ferocious so we must and will continue to invest heavily in our digital future, and keep up the pace on our transformation. These are exciting times for Shop Direct.”
Shop Direct Heather Astbury 07880 096636
Dan Rubel 07880 714814
Brunswick Eilis Murphy 020 7404 5959
Helen Smith 020 7404 5959
ABOUT SHOP DIRECT
Shop Direct is the UK’s second largest pureplay online retailer, with annual sales of almost £1.8 billion. Our digital department store brands are Very.co.uk, Littlewoods.com and VeryExclusive.co.uk, and receive an average of 1 million website visits every day, with more than 59% of online sales completed on mobile devices.
We exist to make good things easily accessible to more people. With our department store range of famous brands, market-leading ecommerce and technology capabilities and unique financial services products offering flexible ways to pay, we’re well placed to deliver on that promise.
We sell more than 1,100 famous brands, including big name labels and our own exclusive brands. We have 4 million customers and deliver 48 million products every year. Our free click and collect service, delivers to 5,800 stores across the country, increasing ease and convenience for customers.