Very Group losses grow, fashion has tough quarter buy premium fashion is up

Very Group has published its Q1 results (the 13 weeks to late September) and the period was clearly a tough one for the online retail giant.

The company said that, as expected, the market proved challenging given ongoing economic pressures. In particular, it faced challenges within the Fashion and Sport category, although its Home sales improved and as these also generate a high margin, that was good news.

Total group revenue for the company fell by 4.9% to £450.2 million. And the overall difficult backdrop resulted in lower sales at Very UK, its biggest operation. Sales there were down 3.8% year on year at £392.1 million. The flagship Very UK brand represented 87% of sales, up from 86% a year ago. 

Its smaller Littlewoods operation has been declining for some time and saw revenue down 14.4% at £45 million. The company said this was in line with expectations as the “managed declined strategy for this brand continues”.

Despite this, the group said it delivered an “improved earnings performance” in Q1 with its continuing focus on cost control contributing to an increase in adjusted EBITDA. That was up 7.8% year on year at £56.7 million. 

But unadjusted EBITDA — that is, before exceptional items — was actually down 10.1% at £54.5 million. The company saw £13.6 million of exceptional costs in the period, including £7 million of logistics strategy costs, a £3.7 million spend on its tech acceleration programme, £1.3 million of restructuring costs and £1.6 million of professional fees. 

The loss before tax excluding exceptional items was £9.3 million. But with exceptional items taken into account, the loss was £22.9 million this time, compared to a loss of £5.8 million a year earlier.

Diving more deeply into the sales figures and looking at retail sales in particular, the company said group retail sales fell 5.7% to £338.4 million. Within this retail sales at Very were down 4.6% at £286.4 million.

Its largest category, Electrical, was down 4.4% at Very UK as it faced tough comparisons with the same quarter in the previous year. The Toys, Gifts and Beauty category also had a difficult comparison and declined 4.1%. That said, within this very varied category, it saw a 4.2% increase in Beauty specifically, the strategically important Home category saw growth of 2.8% as sales of home accessories, textiles and upholstery increased. But the worst news came in Fashion and Sports, which declined 8.6% in a “heavily discounted and contracting market”. Again, there was some hope within the category as premium fashion grew by 1.6%. 

Meanwhile, the company’s finance operation Very Finance saw revenue down 1.5% at £106.7 million. That reflected the underlying performance of the Littlewoods business, although Very UK was more buoyant.