// Shop Direct’s full year results show pre-tax losses have widened from £24.7m in 2018 to £185.5m this year
// This has been attributed to £310.2m in exceptional costs, of which £241m derived from PPI claims
// However, Shop Direct’s overall sales up 1.8% and EBITDA up 3.3%
Shop Direct has revealed a huge widening of losses in its full-year report, which the online retail group blamed on a surge in PPI claims.
For its 52-week period ending June 30, the parent company of online retailers Very and Littlewoods booked a £185.5 million loss before tax, more than seven times the full-year pre-tax loss of £24.7 million it recorded last year.
Shop Direct attributed the spiralling loss to exceptional items of £310.2 million, which comprised of a £241 million increase in regulatory provision to “cover customer redress payments for historical shopping insurance sales” as a result of a surge in PPI claims in the run-up to the August claims deadline.
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The company added that 276,000 PPI claims were submitted in August 2019, versus the typical monthly run rate of 40,000, and was now evaluating a number of funding alternatives to address the increased liability.
Elsewhere, Shop Direct recorded a 1.8 per cent uptick in group revenue, coming in at £1.99 billion for the full year compared to last year’s £1.95 billion.
Between Very and Littlewoods, the former was the star performer thanks to a 7.1 per cent year-on-year rise in sales to £1.48 billion, while the latter declined 11.3 per cent year-on-year to £505.3 million.
Shop Direct’s reported full-year EBITDA also increased, coming in at £271 million – or a 3.3 per cent year-on-year uptick, and operating profit before exceptional items increased 0.7 per cent to £226.2 million.
Meanwhile, while gross margin declined year-on-year from 39.9 per cent to 39.6 per cent, Shop Direct’s reported EBITDA margin increased from 13.4 per cent to 13.6 per cent.
Finally, the number of overall Shop Direct customers increased marginally by 0.7 per cent year-on-year to 4.05 million, which was boosted by 5.7 per cent growth in Very customers to 2.98 million.
Shop Direct is poised to rebrand to The Very Group in a bid to bring its name closer to its flagship retail brand, Very.