Very.co.uk and mobile growth drive 512% profit surge at Shop Direct

Shop Direct said earnings were driven primarily by its Very.co.uk brand as well as mobile growth across the group, which also owns Littlewoods.

The profit growth builds on last year, when Shop Direct turned its first pre-tax profit, in 2012/2013.

Profit before tax and amortisation more than doubled from £30.8m to £64.6m. EBITDA increased 24% to £164.8m.

Group sales were up 3% to £1.74bn, while turnover at Very was up 23.1% and is now the group’s largest brand, delivering more than £700m revenue.

Online accounted for 84% of total sales, rising to 86% in the first quarter of the new financial year. This compares with 78% in 2012/2013.

Mobile accounted for 44% of online sales, rising to 52% for the first quarter and compared with 27% for 2012/2013.

Shop Direct said 54% of its customers browse and shop across more than one device, with a fifth using three; desktop, tablet and mobile.

The retailer continued to “profitably manage” sales declines within its “heritage” brands Littlewoods.com and KandCo.com.

Shop Direct chief executive Alex Baldock said: “These are strong results, driven by the outstanding growth of Very.co.uk and the unrelenting boom in m-commerce. Mobile continues to be a game changer for us, with more than half of our online sales now from smartphones and tablets.

 “It’s clear that our strategy is working and we’ve made some big strides toward building a world-class digital retailer. But we’re nowhere near the full potential of this business, there’s a ton more to do, and we’ll continue to invest heavily to get it done.

 “Looking ahead, we’re excited to have announced the launch of our new luxury etail brand, Very Exclusive, which will take place during London Fashion Week in February 2015. In the meantime, our focus is on delivering another great Christmas for our millions of customers against what remains a tough economic backdrop.”

Shop Direct said its first Black Friday promotion before Christmas last year generated the highest ever daily orders for Very.co.uk, with 10,000 orders placed during its busiest hour.

Electricals and seasonal were Shop Direct’s strongest growth categories, driven by TVs, white goods and gaming consoles as well as the expansion of its beauty offering.

Shop Direct has also focused on developing an easier customer experience. It has invested in its data analytics capability, and is also experimenting with new ideas “at scale”. The retailer said it is launching up to 50 tests per month across its sites, and this is to increase to 140 in 2016.