Very Group back in profit, sales up strongly
Retail giant The Very Group has returned to profit and said its revenue has risen above £2 billion for the first time ever in the year to the end of June. On Thursday, the company also said it has made a strong start to FY21 with group retail sales seeing double-digit growth.
For its last financial year, retail sales at the Very.co.uk webstore increased 10.5% to £1.23 billion, driving group revenue growth of 2.9% to £2.051 billion. That came as Very.co.uk saw customer numbers rising 14.1% to 3.4 million, boosting total group customers by 10.6% to 4.5 million. The site’s share of the non-food market rose more than 1ppt in Q4.
Meanwhile the “managed decline” at Littlewoods slowed with a drop of 8.8% to £460.9 million, which was within expectations.
Importantly the group swung back into profit with a pre-tax figure of £48 million and underlying EBITDA of £264 million, each including Covid-19 related costs. The firm’s volume growth and cost efficiency largely mitigated £12.4 million of Covid-19 impacts on EBITDA.
But the group gross margin declined 3.1ppts to 36.5%, reflecting lower financial services income, additional Covid-19 bad debt provisioning and the change in product mix seen in Q4 following the impact of Covid. However, the financial services business “remained robust with improving payment rates and default rates in line with historic trends”.
Looking at specific product categories, the company saw its strongest uplift in categories that didn’t include fashion. While some delivered double-digit rises, Fashion & Sports was up only 0.9%, although it saw strong growth in women’s and children’s sports clothing (+21.6% and +22.6% respectively).
During the year, it introduced over 100 new brands and widened its existing relationships. Topshop and Mint Velvet were added while existing brands including Tommy Hilfiger, Barbour and Hugo Boss were expanded. It also onboarded 50 new beauty brands including Elemis, Cowshed, Iconic London, Delilah, Nip + Fab and Ren.
The company invested heavily to improve its digital operations and during the year this included the opening of a new highly automated fulfilment centre, Skygate, on time and to budget. It’s now operational for the upcoming peak trading period.
It also saw continued investment in its AI-powered chatbot, which allows customers to ask common customer service queries in their own words. It manages 25,000 customer interactions per week, which grew to 30,000 during the pandemic. The chatbot, which was previously only available via the Very app, launched on the Very website in September.
Meanwhile, along with the results, the company highlighted shifts in the way Britons were shopping during lockdown. It said more shopping was happening during working hours and less in the evening as consumers working from home were able to browse shopping sites without manager scrutiny. But patterns have now gone back to normal.
During lockdown, Thursday and Friday became the favourite shopping days, although this has also shifted back to early weekdays since the lockdown ended.
One development that hasn’t gone back to normal though, is that consumers continue to shop more on their phones via an app rather than on a computer. This trend had been developing fast pre-lockdown and was expected to change during lockdown. But it didn’t and the trend is still accelerating. Some 81% of orders came from mobile between 1 April and 31 August, an increase of 6ppts year-on-year.
Consumers also switched to more direct deliveries rather than click & collect as they were confined to their homes. In Q4, home deliveries made up 80% of the total compared to 67% a year ago. The figures have started to shift back to normal but are still not where they were a year ago.
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