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Shop Direct turns in first pre-tax profit for a decade

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Shop Direct has turned in its first pre-tax profit in 10 years, and today said innovations including personalisation would be at the heart of its strategy over the next five years.

The online retailer, which trades through brands including , and , today reported group sales of £1.69bn in the year to June 30, 1% up on last year’s sales of £1.67bn. Pre-tax profits hit £6.6m, up from a pre-tax loss of £57.7m last time, as the company reduced exceptional costs to £8.4m from £46.2m last time.

“These results mark an important milestone in the journey of Shop Direct into a world-class digital retailer, “ said chief executive Alex Baldock.

“We’re delighted to report a positive pre-tax profit for the first time in 10 years, giving us a solid platform from which to move forward.”

He added: “We have a new level of ambition and have set out a clearly defined and disciplined strategy for the continued evolution of Shop Direct, with world class personalisation at the heart.”

Shop Direct said that personalisation would help it to give customers “a highly relevant, intuitive shopping experience.” It said it had already seen “significant early gains” through the use of email marketing unique to each customer, and on-site product recommendations. It also said that its development would build on a unique wealth of data related both to ecommerce and to financial services.

Other innovations would include the development of its own-brand fashion labels, and of a specialist team set up to introduce lean principles and operational efficiency.

The company said online sales accounted for 78% of total transactions during the year, and that 27% of its online sales were made over mobile devices. That’s up from 20% last year. Some 48% of customers now shop across more than one device, while 16% use desktop, tablet and mobile together.

“Almost half of our customers now browse and shop our sites across multiple devices, with tablets in particular increasing in importance in the customer journey,” said Baldock.

Shop Direct identified newer brands and as the “future growth drivers of the business”. In the latest year they turned in combined sales growth of 18%. Meanwhile, longstanding brands and saw their sales fall by 7%. Also falling was the number of catalogues distributed, which more than halved from 8.2m last year to 4m in the year just gone.

High-performing categories included electrical and seasonal goods. The company predicted that its best sellers over the Christmas season would include novelty jumpers, onesies, the Furby Boom, the Sony PlayStation 4 and the Microsoft Xbox One.

“We occupy a unique position in the UK’s digital retail market by making good things easily accessible to more people, and are proud of the part we play in our customers’ lives,” said Baldock. “Our attention and energy are now fully focused on delivering a great Christmas for our customers as we enter the busiest and most important trading period of the year.”

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