Shop Direct in the red with £10.7m loss
Shop Direct continued to make strides as the UK’s second largest online retailer in the third quarter, however regulatory costs linked to PPI claims has pushed the parent company of Very.co.uk into the red.
In its third quarter report the group revealed a loss of £10.7m for the nine months to 31 March, compared to profits of £57.4m for the same period last year. The number includes regulatory costs of £100 million, which the company has set aside to pay PPI claims.
PPI, or payment protection insurance, was usually sold with loans, credit cards and store cards, however it has been found that it was often mis-sold. Shop Direct, which offers store credit to customers, paid back nearly £80 million to customers during the nine month period.
Beyond the loss, Shop Direct’s year-to-date performance was characterised by strong growth at its Very brand. Group revenue, comprising retail and financial services, increased by 1.6% to £1.51 billion, boosted by Very which recorded revenue growth of 10.6% to £1.06 billion. Meanwhile, Littlewoods continued its planned decline with revenue down 15% to £445 million.
The group’s retail sales grew 1.2%, but clothing and footwear revenue growth stalled 0.6%. Shop Direct said childrenswear and sportswear performed well, as well as beauty and gifting products. Furniture and homeware revenue declined by 9.4%.
The company moved into the final quarter of the year with a new CEO, Henry Birch, who joined the business on 14 May.
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