Shop Direct defies Brexit gloom with fifth year of record sales

Shop Direct’s long-term investments in digital, personalisation and data are paying off, with the British owner of Very.co.uk announcing on Monday its fifth consecutive year of record sales and underlying profits.


Shop Direct

The company, which also owns Littlewoods.com, VeryExclusive.co.uk and LittlewoodsIreland.ie, said group sales for the year to 1 July 2017 increased by 5.6% on a like-for-like basis to £1.93bn (they were up 3.7% on an unadjusted basis), boosted by its flagship site Very.co.uk.

Very contributed £1.26bn in sales, representing a 14.6% growth on a like-for-like basis and 12.6% on an unadjusted basis. Across the group, comparable sales of clothing and footwear grew by 6.4%, as more brands were added to the roster and the athleisure trend drove an impressive 21.8% uplift in sportswear.

Shop Direct’s roster of over 1,800 brands now includes premium and aspirational brands such as Jigsaw, Hackett and Victoria Beckham.

Mobile commerce was also key, with sales via smartphones making up 53% of all online sales, up 10ppts compared with 2016. Mobile devices now account for 69% of all online sales, said the group.


Sales of sportswear increased by 21.8% during the year and boosted the clothing and footwear categories - Shop Direct

In addition to announcing record sales, Shop Direct reported strong growth in annual profits, with underlying profit before tax growing by 10.2%1 to £160.4m during the year (up 6.6% on an unadjusted basis).

Group gross margin was maintained at 40.8% despite the market being highly competitive and promotional during the period.

Speaking about the results, Shop Direct CEO Alex Baldock, said:  “Our fashion performance stood out in a volatile market as we brought even more famous brands within reach of our customers. Spotting the athleisure trend early boosted sportswear and V by Very became an £150m brand in its first full year.

“Our long-term investments in digital, data, personalisation and Very are coming good. And our obsession with winning the ‘three-second audition’ on smartphones also continues to pay off. We’re delivering one of the most relevant shopping experiences on a 4.7-inch screen, with our five-star apps, digital marketing expertise and leadership in personalisation.”

INNOVATION

In its effort to spearhead its digital transformation, Shop Direct has embraced big data and machine learning, and launched several initiatives during the year. In addition to appointing Jon Rudeo as director of retail, technology and data, the company to invest in mobile personalisation and has partnered with Google and Facebook to identify users who look like valuable customers, and serve them relevant ads and product recommendations.

Machine learning is being also used to identify customers who are exhibiting signs of lapsing, to automatically contact them with an incentive to shop, and predict when a customer will run out of a product they’ve previously purchased.

Innovation will continue this year with the launch of an AI-powered customer service chatbot within the MyVery app. The AI-powered conversational user interface can answer 32 different types of customer query, taking Shop Direct closer to its goal of developing Very Assistant into a personal shopper for every customer.

“Artificial intelligence is already driving results for us and we’ll soon launch one of UK retail’s first AI-powered chatbots for customer service. Longer term, we believe AI will bring scale to personalisation so digital retailers like us can be every bit as personal as stores. Very Assistant 2.0 will be another step closer to us democratising the personal shopper,” said Alex Baldock.

FINANCIAL 2018

The group's good fortune is expected to continue in financial year 2018, with the company saying the first quarter has been “encouraging”.

Baldock said: “We don’t expect the economic backdrop to get any easier, but we’ve started our new financial year in line with expectations and are confident of delivering another record year."

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