Very Group Notes First Quarter Sales Decline

The Very Group has published financial statements relating to the first quarter of its 2024-2025 financial year, covering the 13 weeks ended 28th September 2024.

Review of the business
As expected, the market in Q1 FY25 proved challenging given ongoing economic pressures and as a result, we saw a decline in Very UK sales of 3.8% year on year to £392.1m (Q1 FY24 YTD: £407.6m). Despite this, we have delivered an improved earnings performance in Q1, with our continued focus on cost control contributing to increased adjusted EBITDA2, up 7.8% year on year to £56.7m (Q1 FY24 YTD: £52.6m). 

The EBITDA performance paired with careful working capital management has in turn contributed to improved operating cash flows, generating a cash inflow from operating activities of £28.7m, an increase of £68.9m on the prior year (Q1 FY24 YTD: outflow of £40.2m). Overall, cash and cash equivalents decreased year on year to £11.6m (Q1 FY24: £37.8m) as a result of increased investing and financing cash outflows.   

Whilst we have seen challenges in the retail market, particularly within Fashion and Sports, our Home sales have improved which also generate a high margin. As we continue to focus on higher margin sales and cost discipline, we expect to see a strengthening of the profitability of our business in FY25. 

Total revenue
Total Group revenue decreased by 4.9% to £450.2m (Q1 FY24 YTD: £473.4m) compared with the prior year, as a result of the ongoing tough economic environment. Within total revenue, our flagship brand Very UK represents 87% of sales (Q1 FY24 YTD: 86%) and saw a decrease in revenue of 3.8% to £392.1m compared with the prior year (Q1 FY24 YTD: £407.6m). Littlewoods revenue declined 14.4% to £45.0m (Q1 FY24 YTD: £52.6m), which is in line with expectations as the managed decline strategy for this brand continues.  

Retail sales
As a result of a tough retail climate across the UK, Group retail sales3 declined by 5.7% year-on-year to £338.4m (Q1 FY24 YTD: 358.8m). Within this, Very UK retail sales declined by 4.6% year-on-year to £286.4m (Q1 FY24YTD: £300.4m).  Our largest category, Electrical saw a decline of 4.4% at the Very UK level as a result of annualising against a quarter which included significant gaming product releases. Toys, Gifts and Beauty also annualised against a year in which we heavily invested in the category, and as such has declined 4.1% year on year. However, within this category we saw growth of 7.7% in boys’ toys and 4.2% in beauty. The Home category is of strategic importance as we prioritise higher margin sales, and in Q1 we saw growth of 2.8% compared to the prior year. This was largely due to an increase in sales of home accessories, textiles and upholstery. Fashion and Sports declined 8.6% in a heavily discounted and contracting market, although within this category, premium fashion grew year on year by 1.6%.

Very Pay revenue
Underpinning Very Finance income is the movement in the average debtor book. At a Group level, the average book declined 0.7% to £1,671.0m (Q1 FY24 YTD: £1,682.1m), reflecting the underlying performance of the Littlewoods business. At a Very UK level, the debtor book grew 0.9% to £1,442.2m (Q1 FY24 YTD: 1,428.9m) year-on-year as our flexible payment options continue to prove relevant to our customers.  As a result of the Group debtor book performance, Very Finance revenue declined by 1.5% to £106.7m (Q1 FY24 YTD: £108.3m). 

Robbie Feather, CEO at The Very Group, made the following comments in the full-year 2024 summary:

“Our unique business model, combining multicategory digital retail with flexible ways to pay, is more relevant than ever for our customers. In a challenging environment, our results reflect a resilient retail performance that remained ahead of the UK online non-food market, as well as a continued strong Very Finance performance. This top line resilience coupled with our continual focus on strong cost management, has driven robust earnings growth in the year. Our results are thanks to the inherent strength of our business model and our loyal and growing customer base. This is underpinned by the tireless work of our people and the benefits of our customer focused investment.

“We are relentlessly focused on our customers’ needs and are adept at continuous transformation to make sure we meet and beat their expectations. We continue to invest in finding new ways to serve our customers, enhancing their shopping experience and giving them access to our wide range of products covering almost every area of life. This is then supported by the convenience and breadth of our flexible ways to pay. 

“We can look back on our FY24 performance with pride and I am confident that we have a great platform on which to build further,” 

Source : The Very Group

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