Robust Performance from Very Group

The Very Group which operates digital retailers Very and Littlewoods, have announced their full year results for the 52 weeks ended 2 July 2022.

• Compared to pre-pandemic performance (FY20), Very revenue grew 12.6% and Group revenue was up 4.8%
• Compared with its best-ever year in FY21, Very revenue decreased 4.0% to £1,790.5m and Group revenue was down 7.3% to £2,148.3m
• Top-line performance was supported by strong Very Finance revenue growth of 10.7% to £397.9m
• Group profit before tax increased 2.2% to £63.9m compared with FY21
• Underlying EBITDA margin improved by 0.6%pts to 13.6%
• As a result of diligent cost management, costs as a percentage of revenue fell 1.6%pts to 23.2%
• Strengthened leadership team, including the appointments and promotions of:
  • Lionel Desclée as CEO and Dirk Van den Berghe as Non-Executive Chair
  • Charlotte Heiss as Group General Counsel and Company Secretary and Sean Hallows as Chief Operating Officer
  • Richard Mayfield and Tim Franklin as Non-Executive Directors
• Developed its tech stack, including new partnerships with commercetools, True Fit, and Amplience to deliver long-term improvements in digital customer experience
• Won ‘Best Place to Work’ and ‘Best Retailer Over £250m’ at the Retail Week Awards 2022

Ben Fletcher, Chief Financial Officer at The Very Group, commented:

“I am pleased to report another robust performance, driven by ongoing structural growth in the Very brand, our integrated business model – which continues to prove resilient as we adapt to changing customer behaviour – and, of course, our amazing people. We also successfully managed costs, achieving a reduction relative to revenue despite inflationary pressures.

“Throughout the year, we were there for millions of families who benefitted from our combination of leading brands and flexible payment options, from the return of fashion for the whole family, to entertaining the kids, updating homes, and accessing the latest games consoles and TVs. We did that while investing in our digital customer experience, modernising our technology, strengthening our Very Pay platform and increasing our product assortment through stockless fulfilment.

“While the rising cost of living and other economic conditions present challenges for all retailers, we’re confident in our resilient and adaptable business model – which combines multicategory online retail with flexible ways to pay. We now turn our attention to delivering an amazing Christmas for the families we serve.”

Financial highlights

• Compared to pre-pandemic performance (FY20), Very revenue grew 12.6% and Group revenue was up 4.8%
• Against our best ever year in FY21, Very revenue was down 4.0% to £1,790.5m (FY21: £1,865.4m) and Group revenue was down 7.3% to £2,148.3m (FY21: £2,317.1m). When FY21, which was a 53-week year, is adjusted for 52 weeks in line with the reported period for FY22, Group revenue fell 5.7% year-on-year
• Very retail sales declined 7.7% to £1,417.3m (FY21: £1,535.6m), but grew 15.3% on a two-year basis
• Fashion and sports made a resurgence as customers returned to more normal shopping habits, with Very fashion sales growing 6.0% year-on-year
• Very Finance revenue grew 10.7% to £397.9m (FY21: £359.6m), owing to a strengthening in the Group’s debtor book, which grew 3.1% to £1,654.1m (FY21: £1,604.3m). The book remains stable and will continue to be monitored closely
• Underlying bad debt continued to be significantly below pre-pandemic levels, but for prudency we have reserved an additional £5.0m provision, increasing bad debt as a percentage of average debtor book by 0.2%pts
• Group gross margin was broadly maintained at 36.2% (FY21: 36.5%), which is testament to the growth of Very Finance and the Group’s management of costs
• Due to diligent cost management, costs as a percentage of revenue fell 1.6%pts to 23.2%.1
• Underlying Group EBITDA decreased 3.0% to £291.4m (FY21: £300.5m), after accounting for the additional £5.0m bad debt and 53rd week in FY21. However, EBITDA margin grew strongly to 13.6% (FY21: 13.0%) due to strong cost control and greater contribution from Very Finance
• Group profit before tax increased 2.2% to £63.9m (FY21: £62.5m), including exceptional items of £41.5m (FY21: £41.3m)
• Positive underlying free cashflow generation of £117.2m (FY21: £163.2m), reflecting normalisation of operating cash flows following our busiest ever trading year in FY21
• We successfully renewed our five-year £575m bond in August 2021, saving approximately £35m in interest over the term of the bond compared with the previous bond

Operational highlights

Very category performance

• Fashion and sports (+6.0%) experienced a resurgence, with particular growth in women's high street brands (+87%) and designer brands (+50%)
• Electrical declined (-12.7%) following an outstanding year during Covid. However, we saw double digit growth compared to pre-pandemic across all sub-categories, demonstrating the strength of our offering. Gaming, in particular, was up 58% on a two-year basis
• Home declined (-22.3%) against strong prior year comparatives in all major furniture categories
• Developing categories broadly flat (-0.2%), with strong growth in personal care (+15.2%)
• Added brands across all categories, including Sosandar, Crew, Estée Lauder fragrance and Simba 
• In August 2022, we launched our ‘Everyday’ fashion and home collection. It includes over 700 items, of which 85% are available for less than £30

Investing in tech and data to improve customer experience

• Made significant progress with our multi-year tech investment roadmap, moving towards a more flexible, cloud-based architecture that will allow us to deliver customer service improvements faster and more frequently than ever before, including:
  • Ongoing ecommerce platform transformation – one of the biggest tech developments in our history – through a partnership with commercetools
  • Providing personalised size and fit guidance working with True Fit 
  • Creating enriched, engaging content partnering with Amplience
• Began our CRM transformation programme to improve the management of information our customer service advisors use
• Used advanced data analysis to support demand forecasting so our category teams can make more-informed buying decisions, improving availability for our customers
• The total number of queries handled by Very Assistant, our artificial intelligence-powered chatbot, increased 37.6% year-on-year, answering an average of 344,000 chats a month

Flexible fulfilment

• Following a successful launch with adidas and Reebok, we made six more brands (Berghaus, Speedo, Quiz, Ann Summers, Lacoste, and Kickers) available via our stockless fulfilment model - which ships some products directly from brands to Very customers, thus increasing range and availability
• At Skygate, our highly automated fulfilment centre in the East Midlands, we:
  • Processed a total of 36.2m items
  • Dispatched 14.8m customer orders, with the fastest order being dispatched in 16 minutes
  • Dispatched 102K orders on our busiest day, 9 December 2021
  • Became more agile in our global sourcing operation by shipping to ports in the North of the UK, where containers headed directly by rail to Skygate

Even greater focus on sustainability

• Progressed towards our target of being carbon neutral in our own operations by 2025, achieving a 40% reduction in Scope 1 and Scope 2 carbon emissions by using renewable energy at all sites
• Won a United Nations award for our work to empower women in India’s textile industry
• Improved the sustainability of our own brand denim by reducing water and energy consumption in the production process via a partnership with denim finishing technology specialist Jeanologia

Source: Very Group & Insight News Team

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