NEWS

Shop Direct reveals significant losses in full year report

Published on: 24th October 2019

The online retail group has blamed the results on a surge in PPI claims.

For its 52-week period ending 30th June, the parent company of online retailers Very and Littlewoods posted a £185.5m loss before tax, more than seven times the full-year pre-tax loss of £24.7m it recorded last year.

Shop Direct attributed the spiralling loss to exceptional items of £310.2m, which comprised a £241m increase in regulatory provision to “cover customer redress payments for historical shopping insurance sales”, as a result of a surge in PPI claims in the run-up to the August claims deadline. The company added that 276,000 PPI claims were submitted in August 2019, versus the typical monthly rate of 40,000, and was now evaluating a number of funding alternatives to address the increased liability.

Elsewhere, Shop Direct recorded 1.8% growth in group revenue, coming in at £1.99b for the full year compared to last year’s £1.95b. Very saw 7.1% year-on-year rise in sales to £1.48b, while Littlewoods declined 11.3% year-on-year to £505.3m. Shop Direct’s reported full-year EBITDA also increased, coming in at £271m – or a 3.3% year-on-year uptick, and operating profit before exceptional items increased 0.7 per cent to £226.2m. Meanwhile, while gross margin declined year-on-year from 39.9% to 39.6%, Shop Direct’s reported EBITDA margin increased from 13.4% to 13.6%.

The number of overall Shop Direct customers increased marginally by 0.7% year-on-year to £4.05m, which was boosted by 5.7% growth in Very customers to £2.98m.

Shop Direct is poised to rebrand to The Very Group in a bid to bring its name closer to its flagship retail brand, Very.

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