New-look Shop Direct sees full-year sales edge up

Shop Direct group revenue edged up in the full year to 30 June 2018, as the Very and Littlewoods owner started life under new leadership.

With Henry Birch in the CEO hot seat for the last four months, Derek Harding as finance director, and the promotion of Sam Perkins to the group executive board, the new-look group reported revenue increase of 1.5% to £1.96 billion for the period.

Very experienced revenue growth of 9.9% to £1.39 billion, but Littlewoods’ revenue was down 14.5% to £569.7 million partly due to a slowdown in the furniture & homeware category.

Group EBITDA grew 11% to £262.3 million, and operating profit before exceptional items grew 9.5% to £224.6 million. Shop Direct reported a statutory loss before tax of £24.7 million, with £22.5 million related to closure costs associated with a new fulfilment centre.

The construction of a 850,000 sq ft distribution and returns centre at the East Midlands Gateway development is under way, and will reportedly be operational by 2021. Shop Direct said the site will allow it to increase cut-off time for next-day delivery to midnight from 7pm.

The company will also be exploring same-day delivery options in the future.

Shop Direct’s technological prowess, honed under previous CEO Alex Baldock, who left to take the CEO role at electricals retailer Dixons Carphone earlier this year, continued.

Orders from the Very smartphone app increased 39.5% year-on-year to represent 25.4% of total orders across all devices. Shop Direct said that, on average, app customers visit the site twice as frequently as other customers and the platform has a 10% better conversion rate compared with other sales channels.

The retailer reported that sales via mobile devices now represent 74% of total online sales.

Shop Direct also said it continued to develop advanced credit decisioning, which will launch in this new financial year and uses machine learning to make “faster, more accurate credit decisions for customers”. Shop Direct is two years into a ten-year deal with IBM that will see its retail and financial services become cloud-based.

Birch said: “Four months into my role as CEO, I’m hugely excited by the potential of Shop Direct. Today we’re announcing results that show a good underlying performance in a competitive external market.”