Shop Direct losses spiral as PPI claims hit bottom line

Skyways House Shopdirect

Source: Shop Direct

Shop Direct has suffered widening pre-tax losses despite increased sales following an “unexpected surge” in PPI claims.

The online retailer booked a statutory pre-tax loss of £185.5m in the 52 weeks to June 30, 2016, up from £24.7m the previous year, which the business attributed to exceptional costs of £310m, including a provision of £241m “to cover customer redress relating to historical shopping insurance sales, following an unexpected surge in claims submitted ahead of the August deadline”.

The retailer, which posted a 3.3% uplift in group EBITDA to £271m during the period, said it is “currently evaluating a number of funding options” to meet the “additional liability” of PPI claim costs.

Operating profit before exceptional items increased 0.7% to £226.2m.

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