Shop Direct recorded its fifth consecutive year of rising profits and sales as purchases made on smartphones comprised over half of the retailer’s overall sales.

The online retailer posted a 10.2% increase in underlying pre-tax profit to £160.4m in the 52 weeks to July 1, as sales increased 5.6% to £1.9bn on a like-for-like basis.

Very was the primary driver of Shop Direct’s growth, with revenues rising 14.6% to £1.26bn. Sales made on mobile devices including smartphones and tablets accounted for 69% of Very’s revenues.

Purchases made on smartphones also made up over half (53%) of Shop Direct’s overall sales for the first time, which the business attributed to its work with Facebook and Google to identify and target its most valuable customers and increased usage of its Very mobile app, which drove 32% of Very’s mobile sales.

Shop Direct’s gross margin for the financial period held steady at 40.8%, which the retailer said demonstrated the strength of its proposition “in a highly competitive and promotional market”.

The etailer said it plans to launch its AI-powered customer service chatbot within the MyVery app during this financial year, which will be equipped to answer 32 different kinds of customer query and recognise and respond to over 4,000 written phrases.

Shop Direct increased its number of credit customers 7.6% overall and 14.1% at Very, which is attributed to better targeting.

Its new financial services platform is set to be unveiled next year following a three-year investment programme to improve this division of its business including personalising credit offers.

Shop Direct’s clothing and footwear sales rose 6.4%, driven by a 21.8% jump in sportswear sales.

Baldock’s comment

Chief executive Alex Baldock said: “We’re pleased to report our fifth successive year of record sales and underlying profits. Once again, Very and m-commerce were the big drivers of our growth.

“Our fashion performance stood out in a volatile market as we brought even more famous brands within reach of our customers. Spotting the athleisure trend early boosted sportswear, and V by Very became an £150m brand in its first full year.

“Our customer already loves the upgrade she gets from our famous brands plus credit, but this business is still nowhere near its full potential. Using personalisation, we’re striving to be the easiest and most inspiring place to shop.

“Artificial intelligence is already driving results for us and we’ll soon launch one of UK retail’s first AI-powered chatbots for customer service. Longer term, we believe AI will bring scale to personalisation so digital retailers like us can be every bit as personal as stores.

“We don’t expect the economic backdrop to get any easier, but we’ve started our new financial year in line with expectations and are confident of delivering another record year.”

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