For the 52 weeks ended 1 July 2023, The Very Group's revenue fell 0.1% to £2.15bn. Very UK sales increased 1.9% to £1.8bn. But profits sank on higher costs.
Fashion and sports declined 8.2% year-on-year in a promotional market while annualising against a step up driven by the UK’s response to the Omicron Covid-19 variant in FY22. Within the category, casual womenswear (+4.8%) and casual menswear (+1.0%) performed strongly.
Brief overview of FY23 results
- Gross margin reduced from £776.7m to £760.3m, a change of 2.1%. This reflects the movement of retail margin owing to strategic investments in retail proposition, changes in category mix and responses to the challenging market dynamics.
- Other operating income fell 15.4% from £2.6m to £2.2m.
- Adjusted EBITDA declined 5.1% from £291.4m to £276.5m as a result of the movement at the gross margin level.
- Group profit before tax (PBT) of £4.6m (FY22: £63.9m), impacted by the heightened cost of funding to the company. Finance costs increased 43.5% in FY23.
Ben Fletcher, The Very Group CFO and CTO, says moving forward the Group's focus is on putting customers at the heart of everything for making it more "relevant" than ever for the customers.
He continues: "We have shown resilience in FY23, just as we have during other challenging economic periods. Our ambition to invest for our customers, rather than retrench, has delivered a market-beating performance, record-breaking NPS, and improved cash flow. We will continue to invest in our core proposition, giving our customers a curated retail offer with flexible ways to pay. Our results this year show the benefit of our approach and we are confident we have a strategy that will bring value in the future."
Moreover, The Very Group plans on partnering to deliver AI-powered search in a bid to improve customer browsing and increase conversion. Other changes include migrating to a new ecommerce platform as part of its tech transformation and adding virtual try-on features.
Despite the "broadly flat" results, GlobalData retail analyst Van Boxel points out it has been a challenging year for online pure plays with the offline channel resurging and weaker demand for online shopping.
However, Van Boxel adds: "Very's investment in AI and 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 The Very Group to 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."
