The Very Group expects annual revenue to exceed £2bn

Online retail business and Very.co.uk owner The Very Group said today (13 August) that it expects annual revenue for the 12 months to 30 June to exceed £2 billion for the first time.

In a trading statement in advance of its year-end results, the company previously known as Shop Direct said sales growth in the fourth quarter for Very.co.uk were up by 36% year on year – contributing to a 10% annual rise in revenue for its core retail business.

Full-year underlying EBITDA is expected to be in the range of £255 million to £270 million, which is expected to result in a growth in pre-tax profit.

The Very Group said it finished the year with cash headroom of over £200 million, and it talked up its online, multi-category business model as “resilient in the face of rapidly changing customer behaviour” and against the backdrop of the coronavirus crisis.

Financial services products are a critical part of the group’s offer, with approximately 95% of sales taken via a credit account. The company said there was an 80% increase in new credit customers in the fourth quarter, in addition to a 128% increase in new cash customers.

In line with Financial Conduct Authority guidance for lenders, The Very Group offered credit customers a three-month payment freeze option if they had been affected by Covid-19, and that offer was then extended for a further three months. Customer payment rates increased in the fourth quarter, and the group expects more people to pay down what they owe in the coming months, which will impact its profitability.

Henry Birch, CEO at The Very Group, remarked: “As in the financial crisis, our business model proved adaptable and resilient in the face of volatile conditions and changing consumer buying patterns.  

“We experienced peak trading levels and recruited unprecedented levels of new customers as our online multi-category model supported by financial services came to the fore.”

He added: “Economic conditions will continue to be challenging, but we believe we are more relevant than ever for customers, who are increasingly buying online. We are well positioned to continue the strong trading into the new financial year and will continue to invest to ensure we are at the forefront of whatever the new normal may be.”

Very.co.uk retail sales in the fourth quarter were driven by electrical and home categories growth of 78% and 53% respectively. However, the group reported a significant decline in fashion sales, which has relatively higher margin rates and therefore resulted in overall cash margin staying at a similar level to last year.

Meanwhile, the group’s new Skygate fulfilment centre opened during the coronavirus-enforced lockdown, giving the company 850,000 sq ft of automated warehousing space that has helped speed up delivery times and returns processing.

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