Resilience appears to be the key word for Very Group in describing its yearly performance in what’s an undeniably challenging market. But flat revenues and a near-£50 million dip in pre-tax profits (albeit to a still-positive £4.6 million), don’t tell the full story.
It saw falling fashion sales but casual wear was strong, as was beauty.
For the 52 weeks ended 1 July, the digital retailer, whose key brands include Very and Littlewoods, remains upbeat “driven by market-beating top-line growth”, it said Thursday.
While Very UK revenues increased 1.9% to £1.82 billion, group revenue remained broadly flat at £2.15 billion and helping keep those numbers from actually falling was a strong performance at Very Finance where revenue growth topped 6% to hit £422 million.
That big dip in pre-tax profit was mostly down to the rising cost of funding, with finance costs increasing an eye-watering 43.5% in FY23.
Group adjusted EBITDA remained “robust”, dipping marginally to £276.5 million from £291.4 million a year ago, hit by pricing investment and cost inflation, but offset by good cost management and that strong Very Finance contribution.
Elsewhere, another positive was group adjusted free cash flow increasing 9.6% to £128.4 million.
Very Group also noted that its overall performance remained ahead of the online non-food retail market and represented growth in market share during the same period.
Performance-wise, its key areas of fashion and sports saw an overall decline of 8.2% year-on-year “in a promotional market”. However, within the category, casual womenswear rose 4.8% and casual menswear was ahead 1% both “performing strongly” it noted.
And in what has become an increasingly important market, Beauty grew 13% year-on-year, following strategic price investment in the category, and personal care also jumped 25%.
Very Group noted its investment in pricing and assortment of key categories, particularly during peak, helped to drive market-beating growth in areas such as beauty “securing market share and growing our debtor book, which supports future income”.
And in a highly cost-conscious market, the group also said it has expanded its value-focused own-brand range — Everyday — “adding 900 quality lines, spanning women’s, men’s, and kids’ fashion”, noting 85% of Everyday fashion items are now available for £30, or less.
Meanwhile, customer experience also registered improvements, helping deliver the group’s “best-ever net promoter score” at 35.9, up 8.2.
The company also said investments in technology transformation continued, including the ongoing migration of systems to a new e-commerce platform and the introduction of AI-powered product discovery across Very’s website and app.
So what does the future hold? Group CEO Lionel Desclée said: “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 multi-category online retail with flexible ways to pay, will continue to deliver for our customers.”
Meanwhile, analysts at GlobalData were mostly positive on the results, supporting Very’s increased investment in AI, seeing it as a key tool “to bolster growth”, while noting the business has navigated the challenging market “very well”.
It said: “Very’s investment in AI is expected to boost group revenue in the coming years, as the enhancements it is making to its online platforms will support the online shopper journey. Indeed, with the release of faster and more efficient search tools, the online pureplay can improve its conversion rate as consumers are better able to find products. AI will also help [it] improve its profit margins through the streamlining of its operations, resulting in more accurate forecasting and faster response times to changes in demand and improvements to product availability.”
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