Online shopping company Shop Direct
has reported improved annual earnings on flat sales, and trading up in some key categories.
Unaudited accounts show Shop Direct’s EBITDA was up 36% year on year to £125m on sales flat at £1.7bn in the year to the end of June. At pre-tax level profit is likely to be “negative”, reflecting exceptionals, said chief executive Mark Newton-Jones.
Newton-Jones, talking to Retail Week
, said Shop Direct’s performance last year reflected tighter credit scoring of customers in tough economic conditions and outperformance by its newest brands, such as Very
, compared with its traditional businesses such as Littlewoods and Kay’s.
Newton-Jones said he was delighted with the performance because the retailer had planned for sales to fall 5% as shoppers’ discretionary spend continued to come under pressure. “The picture is we’ve managed stock really tightly,” he said. “We went into our sales period with 50% less stock than last year and that helped margins.
“We’ve taken significant costs out and some of that will have a positive impact in the year ahead.”
Very was up 33% last year and Isme by 46%, while Littlewoods and Kay’s, where tightening of credit terms has been most felt, were down about 9% between them.
Over the year, group clothing and footwear sales fell 6%, furniture and homewares fell 4% and electricals and seasonal was up 4%.
This final category has performed strongly since the year-end, with sales up 10% in the nine weeks to July 21. Tumble-dryer sales spiked, for example, as consumers were unable to hang out washing during the wet weather.
Online sales now account for 75% of the group's sterling turnover, and mobile shopping now accounts for 12% of total sales. “I think it will easily get past 50% in the next three years,” said Newton-Jones.