Shop Direct posts first pre-tax profit in 10 years

Shop Direct, which operates brands including Very and Littlewoods, has reported pre-tax profit of £6.6m in the year to June 30, against a £57.7m loss last year. Group sales were £1.69bn.

EBITDA increased 22% to £132.5m.

The retailer said electricals and seasonal products were the stand-out category performers, driven by “stellar” sales of tablets, computers, small domestic appliances, gifts and beauty products.

Shop Direct said 78% of sales were completed online during the year, which has jumped to 81% for the first quarter of the new year. More than a quarter (27%) of all online sales were made on mobile devices, up from 20% last year.

The retailer said almost half (48%) of customers now browse and shop across more than one device, with 16% using a three-way combination of desktop, tablet and mobile.

The number of catalogues distributed more than halved during the year – 4 million from 8.2 million in 2012. It delivered 25.9 million parcels in the year, containing 45.6 million products.

Personalisation will form the “core of the company’s growth strategy for the next five years”, said Shop Direct.

The retailer said it will focus on innovation in own-brand fashion, after a “strong customer response” to its recent launch of Very.co.uk’s new womenswear collection, Definitions, and first ad campaign launched to support Littlewoods.com’s core children’s range, Ladybird.

Shop Direct chief executive Alex Baldock said: “These results mark an important milestone in the journey of Shop Direct into a world-class digital retailer. We’re delighted to report a positive pre-tax profit for the first time in 10 years, giving us a solid platform from which to move forward.

“Our newer brands, Very.co.uk and Isme.com, have continued to outperform the market with combined double-digit sales growth.

“Our digital progress also continues at pace. We have a new level of ambition and have set out a clearly defined and disciplined strategy for the continued evolution of Shop Direct, with world-class personalisation at the heart.

“We occupy a unique position in the UK’s digital retail market by making good things easily accessible to more people, and are proud of the part we play in our customers’ lives. Our attention and energy are now fully focused on delivering a great Christmas for our customers as we enter the busiest and most important trading period of the year.”

The retailer said its newer brands, Very.co.uk and Isme.com, delivered a combined sales increase of 18% and are the “future growth drivers of the business”.

Shop Direct reported that combined sales within its ‘heritage’ brands, Littlewoods.com and KandCo.com, fell 7%. However, profitability was maintained “as a result of effective management”.

It predicts its Christmas best-sellers will be novelty jumpers, onesies, Sony PlayStation 4, Microsoft Xbox One and the Furby Boom.

Exceptional costs reduced to £8.4m from £46.2m last year.