A mobile sales “explosion” helped etail group Shop Direct achieve its first pre-tax profit in a decade as it plans to invest £100m to propel growth.
Shop Direct chief executive Alex Baldock said breaking into the black was a “very important milestone for the business and shows the strong foundations the business is built on”.
Mobile accounted for 38% of online sales in the first quarter of its current financial year and has risen to over 40% in October.
“Mobile has really taken off. It’s exploded and is changing the way our customers shop at a dizzying speed,” Baldock told Retail Week. He added that Shop Direct has “at least a 15% lead on the market” in mobile sales. “We plan to make it stay that way,” he said.
Baldock said that a “big chunk” of the £100m that Shop Direct’s billionaire owners the Barclay brothers are investing into the business would be ploughed into mobile, where he said all online growth is coming from.
Tablets were one of its star performers over the period, with sales of the device jumping 300% year on year.
It expects to sell 280,000 tablets in the first three months of its current year. However, Baldock ruled out launching its own tablet like Tesco and Argos.
The £100m will also be invested in personalisation which the retailer said was “core” to its growth strategy.
Baldock said more personalised email marketing was “already paying dividends” and had resulted in greater response rates. The retailer has also offered more personalised credit rates for customers using its finance options.
In its year to June 30, Shop Direct, which operates brands including Very and Littlewoods, posted a £6.6m pre-tax profit against a £57.7m loss last year. EBITDA increased 22% to £132.5m and exceptional costs reduced to £8.4m from £46.2m last year.
Group sales, 78% of which were made online, edged up 1% to £1.69bn but Baldock said there was a “clear growth story” of its newer brands, particularly Very. “There are not many £500m retailers growing at 20%. It’s the future of Shop Direct,” he said.
Sales at its ‘heritage’ brands Littlewoods and KandCo, fell 7%. Baldock said it was “actively managing” this decline to “maintain profitability to fund the growth of newer brands.”