The Very Group Posts Flat Revenue And A Decline In Profit

The Very Group (‘the Group’), which operates digital retailers Very and Littlewoods, today announces its full year results for the 52 weeks ended 1 July 2023.

• Very UK revenue increased 1.9% to £1.82bn (FY22: £1.79bn), while Group revenue was broadly flat at £2.15bn. This performance was ahead of the online non-food retail market and represents growth in market share during the same period[1]
• Top-line performance supported by strong Very Finance revenue growth of 6.1% to £422.1m (FY22: £397.9m)
• Group adjusted free cashflow increased 9.6% to £128.4m (FY22: £117.2m)
• Customer experience improvements helped to deliver the Group’s best-ever net promoter score[2] at 35.9 (+8.2)
• Investments in technology transformation continued, including the ongoing migration of systems to a new ecommerce platform and the introduction of AI-powered product discovery across Very’s website and app

Lionel Desclée, CEO at The Very Group, commented:

“Despite challenging economic conditions, our adaptable business model has driven market-beating top-line growth, improved cash flow year-on-year, and our best-ever customer satisfaction score. It’s down to the investments we made in pricing and our digital customer experience, our cost discipline, and the commitment of our people in serving families in the UK and Ireland.

“In the year ahead, we will continue to deliver a combination of investment-led growth – with a clear focus on improving our digital customer experience – and diligent cost management. While the market will remain challenging, we’re confident our proven and resilient business model, which combines multicategory online retail with flexible ways to pay, will continue to deliver for our customers.”

Financial highlights

• Very UK revenue increased 1.9% to £1.82bn (FY22: 1.79bn), while Group revenue was broadly flat at £2.15bn.
• Very Finance revenue growth of 6.1% to £422.1m (FY22: £397.9m), owing to a strengthening in the Group’s debtor book, which increased 3.6% to £1.71bn (FY22: £1.65bn).
• Underlying bad debt continued to be below pre-pandemic levels and fell as a percentage of the Group’s debtor book year-on-year due to continued prudence and high-quality credit risk management.
• Robust Group adjusted EBITDA of £276.5m (FY22: £291.4m), which was impacted by pricing investment and cost inflation, and mitigated by good cost management and strong Very Finance contribution. Compared with FY20, Group adjusted EBITDA margin was flat at 12.9% despite the inflationary pressures.
• Group adjusted free cashflow increased 9.6% to £128.4m (FY22: £117.2m), thanks to strong cash management and cost discipline.
• Our investment in pricing and assortment of key categories, particularly during peak, helped to drive market-beating growth in our toys, gifts and beauty, and electrical categories, securing market share and growing our debtor book, which supports future income. 
• Group profit before tax (PBT) of £4.6m (FY22: £63.9m), impacted by the heightened cost of funding to the company. Finance costs increased 43.5% in FY23.

Operational highlights

Very.co.uk category performance

• Toys, gifts, and beauty grew 13.0% year-on-year, following strategic price investment in the category. This performance was driven by toys (+20.6%) and personal care (+25.0%).
• Electrical, Very UK’s largest category by retail sales, was up 3.3%, underpinned by small domestic appliances such as air fryers (+52.4%), and mobiles, tablets and wearable tech (+7.0%).
• Fashion and sports declined 8.2% year-on-year in a promotional market while annualising against a step up driven by the UK’s response to the Omicron Covid-19 variant in FY22. Within the category, casual womenswear (+4.8%) and casual menswear (+1.0%) performed strongly.
• Home was down 1.4% year-on-year. Within the category, strong performance in textiles (+5.3%) and upholstery (+9.6%) was offset by declines in home accessories (-6.0%) and garden (-12.7%).
• The Group expanded its own brand range, Everyday, adding 900 quality lines. Spanning women’s, men’s, and kids’ fashion, as well as homeware, 85% of Everyday fashion items are available for £30 or less.
• Launched an AI platform in partnership with Amazon Web Services to transform retail forecasting operations. For the customer, this means the Group is better prepared for changes in demand and can ensure it has the right products available at the right time.

Investing in tech, data, and AI to improve customer experience

• The Group made significant progress with its multi-year tech investment roadmap, moving towards a more flexible, cloud-based architecture, including:
  • Ongoing ecommerce transformation, with more elements migrated to the Group’s new platform, Skyscape. The platform will allow it to deliver customer service improvements faster and more frequently than ever before.
  • A new partnership with Constructor to implement AI-powered search, browse, and autosuggest tools across its website and app.
  • Virtual make-up try-on features that use augmented reality to allow customers to discover and choose products that best match their needs.
  • Migrating to a cloud-based customer relationship management system, allowing the Group to derive customer insights faster and adapt to their needs more effectively.
• Customer experience initiatives helped the Group deliver its best-ever net promoter score of 35.9, up 8.2pts year-on-year.

World class fulfilment capability

• At Skygate, its highly automated fulfilment centre in the East Midlands, the Group:
  • Processed a total of 33.3 million items.
  • Dispatched the fastest order in 12 minutes (from order placement to ready for dispatch).
  • Dispatched 216,000 orders on the busiest day of its financial year, 22 November 2022.

Source : The Very Group

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