Online retailer The Very Group is back in the black after sales climbed in its last financial year.

The online department store and owner of the eponymous brand generated profit before tax of £48m, including Covid costs, in the year to June 30 when group sales advanced 2.9% to £2.05bn.

Retail sales through increased 10.5% to £1.23bn. Most product categories performed strongly for the group. Electricals were up 18%, home 13%, fashion 0.9% and other categories, which include toys and beauty, were up 10.5%.

Group gross margin slipped 3.1 percentage points to 36.5%, which the retailer said reflected lower financial services income, additional Covid-19 bad debt provisioning and a change in product mix in the final quarter, driven by the pandemic.

The retailer said it had made a strong start to the new financial year, “with group retail sales in double-digit growth”. Very’s new automated fulfilment centre, Skygate, has opened and benefits are expected to be felt during the peak trading period. 

Very Group chief executive Henry Birch was “delighted” by the results. He said: “Despite the unprecedented challenges of the pandemic, the business has proven its adaptability yet again.

“We delivered for record levels of new customers, who used the Very app for items to entertain their families and improve their homes, and increasingly valued our flexible ways to spread the cost.

“We prioritised the safety of our colleagues, whilst remaining focused on customer experience. We migrated to, tested and launched Skygate, our new automated fulfilment centre, which enables us to process customer orders within 30 minutes, whilst materially reducing costs, and is all set to support our peak trading period.

“The economic landscape will remain unpredictable. However, we believe our flexible and resilient business model, which gives customers access to the brands they love via flexible ways to pay, will help us thrive as customers continue to rely on online shopping.

“Our purpose, ‘to make good things easily accessible to more people’, has never been more relevant.”