Following today’s release of The Very Group’s figures for the 39 weeks ending 1st April 2023; Tash Van Boxel, Retail Analyst at GlobalData, a leading data and analytics company, offers her view: “Through the robust performance of its financial services, as well as continued investment in price and stock availability, The Very Group has managed to remain flat on the year, with group revenue up 0.1% to £1,680.2m. Revenue was pulled down by a disappointing performance in Very Ireland (down 15.3%) and the expected decline in Littlewoods (down 8.9%), though Very UK was more resilient, up 2.2% to £1,426.7m. Indeed, the group’s retail sales declined 2.5%, driven by consumers cutting back on non-essential purchases, particularly in fashion, due to persistently high inflation. Therefore, the group is right to prioritise investing in its price architecture, as this will entice spend by enabling consumers to trade down. However, as a result of this increased investment, profit margins have decreased, with group EBITDA now standing at £211.4m, down 8.6% on the same period last year.
“Very UK’s strong performance was driven by double-digit growth in toys, gifts & beauty (up 12.8%), with toys and personal care particularly standing out (up 20.5% and 18.0% respectively). These categories have reaped the benefits of continued focus on development, as investment in stock availability and pricing ensured that Very UK was a key destination. To maintain this momentum, the group must invest in expanding its ranges at both ends of the pricing architecture, as this, along with good stock availability, will enable consumers to switch away from their usual retailers when products are out of stock or too expensive. In addition, Very UK’s electrical sales also grew 3.0%, driven by small domestic appliances and wearable tech. As the group’s largest category, now making up 44.9% of its sales, the retailer must not lose sight of improving and expanding its electrical ranges, in tandem with the investment in its smaller, still developing categories.
“By contrast, fashion sales declined 8.2% at Very UK, caused by a particularly weak performance in sportswear. While part of the step back in sportswear will be due to a switch to more fashionable styles, Very has struggled given the high saturation of the sportswear market and being unable to compete with the likes of JD Sports and ASOS. Therefore, The Very Group must introduce more desirable brands to its offer, such as TALA and Sweaty Betty, to attract new demographics, as low prices and stock availability will not be enough to entice spend in this category.
“The Group’s financing service has remained an area of strength, with revenue up 6.8% to £319.6m. Given that persistent inflation is continuing to put pressure on consumers’ finances, the online pureplay’s credit offer has gained appeal, allowing shoppers to spend beyond their means. Nevertheless, the group should not rely on its financing service to continue to drive revenue growth, and must focus on promoting its competitive price points more to entice spending.”
