Shop Direct is paying a heavy price for its reliance on financial services after revealing its pre-tax losses have widened from £24.7m in 2018 to £185.5m, following a surge in PPI claims which have landed the online shopping giant with a £241m payout bill.
The company, which owns the Very and Littlewoods brands, attributed the spiralling loss to exceptional items of £310.2m, the vast majority a result of a surge in PPI claims in the run-up to the August claims deadline.
In total, 276,000 PPI claims were submitted in the final month, compared to the typical monthly rate of 40,000. It said it was now “evaluating a number of funding alternatives to address the increased liability”.
It was not all doom and gloom though, with a 1.8% rise in group revenue, coming in at £1.99bn for the full year, driven by 7.1% year-on-year rise in sales at Very to £1.48bn. Littlewoods, however, continued to contract, falling 11.3% to £505.3m.
Earlier this year, the company – which is poised to rebrand as The Very Group – appointed a new tech leadership team, headed by former Sky Betting & Gaming chief Andy Burton to ramp up its digital transformation. He now leads the group’s 275-strong technology team.
At the time, Burton said: “The business has achieved so much in a short time but there’s still a lot of work to do. The best technology innovation, culture and talent will play a massive part in that.”
This week, bitter rival N Brown beefed up its own digital transformation but it appears to be in a stronger position, having already overturned last year’s £27.1m loss to record a statutory profit of £18.8m in the first half of 2019. It cited a “more targeted approach to marketing and customer recruitment” for the turnaround.