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Very Group's Sales Exceed 2bn For First Time

Very Group article image

The Very Group has provided a trading update in advance of its year end results for the year ended 30th June 2020.

Summary

  • A 65% increase in website visits driving exceptional retail sales growth of 36% at Very.co.uk in the final quarter of FY20 and leading to full year growth of over 10%
  • Annual Group revenue exceeding £2bn for the first time
  • Very.co.uk’s share of UK non-food market up by over 1%pt in the final quarter
  • New customers grew by over 100% in the final quarter with very strong growth across both cash (+128%) and credit customers (+80%)
  • Full year underlying1 EBITDA expected to be in the range of £255m to £270m
  • Strong Group liquidity and cash position with year-end cash headroom of over £200m
  • Our online, multi-category business model has again proven resilient in the face of rapidly changing customer behaviour
  • Financial services business has remained robust with improving payment rates and default rates in line with historic trends
  • Opened Skygate, our new state of the art fulfilment centre on 23rd March, on time, on budget and which processed its one-millionth outbound customer order in July
  • Despite experiencing peak trading levels, our business has proven resilient and flexible, maintaining full operational capacity throughout the COVID crisis, including a transition to working from home for all contact centre colleagues
  • Given the strong performance and positive outlook we have not utilised the Government’s Coronavirus Jobs Retention Scheme (CRJS) and have not accessed Government loan schemes
  • The Littlewoods Pensions Scheme, which is sponsored by The Very Group, has completed a buy in deal with Rothesay Life for just under £930m in July 2020. This is the second buy-in for the scheme with substantially all member liabilities for The Very Group now insured.

Henry Birch, CEO at The Very Group, commented:

“Thanks to the tireless efforts of our colleagues, we performed very strongly in Q4 despite the challenges of COVID-19. We prioritised the safety of our people and delivered an uninterrupted service for new and existing customers, who chose us as their preferred shopping destination during lockdown.

“As in the financial crisis, our business model proved adaptable and resilient in the face of volatile conditions and changing consumer buying patterns.  We experienced peak trading levels and recruited unprecedented levels of new customers as our online multi-category model supported by financial services came to the fore.

“Despite operational challenges caused by COVID, we adapted and pressed on with the migration to our Skygate fulfilment centre, which will create game changing new benefits for our customers and our business.

“Economic conditions will continue to be challenging, but we believe we are more relevant than ever for customers, who are increasingly buying online. We are well positioned to continue the strong trading into the new financial year and will continue to invest to ensure we are at the forefront of whatever the new normal may be.

“Our purpose to “Make good things easily accessible to more people” is more relevant than ever and we look forward to helping even more UK shoppers seamlessly access the products they need for themselves and their families.”

Quarter 4 FY20 trading

Very.co.uk retail sales grew by 36% over prior year in Q4, driven by growth in electrical and home categories of 78% and 53% respectively.  Very.co.uk’s share of the UK non-food market grew by over 1%pt to almost 3% and the top 5 performing departments were gaming, vision, computing, garden tools / DIY and small domestic appliances.  Overall Group retail sales (including Littlewoods) grew by 28% in Q4 compared with the prior year.

Although electrical and home grew strongly, the significant decline in fashion, which has relatively higher margin rates, resulted in overall cash margin at a similar level to prior year.

FY20 full year guidance

Subject to the completion of our year end audit we expect underlying1 FY20 EBITDA to be in the range of £255m to £270m. Management expect that this EBITDA will deliver a positive profit before tax.

Source : Insight DIY Team and Very Group

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13 August 2020

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