PPI costs plunges Shop Direct into the red

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Shop Direct board

Shop Direct has swung to a loss in its third-quarter after it incurred £100 million in costs related to PPI claims.

According to the Evening Standard, the parent company of Littlewoods and Very said this came about after regulators extended the PPI claim deadline until August next year.

Although Shop Direct has paid out nearly £80 million in the nine months ending March, after accounting for the provision of PPI, pre-tax losses for its third quarter were £10.7 million.

However, there was a 1.6 per cent uptick in group revenue grew in the third quarter, but underlying earnings were down 1.8 per cent to £167.8 million due to tighter margins.

Shop Direct added that strong sales at Very helped offset a decline in Littlewoods.

In addition, it welcomed more than one million new customers in the year to date.

Although Shop Direct managed to raise £550 million from investors in November, the price of its bonds has dropped to 79.2p in the pound – down from 85p.

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