Shop Direct, the group behind catalogue retailer Littlewoods and very.co.uk, in line to post £50m profits after an accounting switch to IFRS standards mean it would no longer be hit by amortization charges
January 29, 2014 Leave a comment
January 26, 2014 11:18 pm
Shop Direct in line to post £50m profits
By Duncan Robinson
Shop Direct, the group behind catalogue retailer Littlewoods and very.co.uk, is set to make a pre-tax profit of nearly £50m this year putting the retailer in the same league as fast-growing rival Asos.
The retailer, which is owned by the Barclay family, posted pre-tax profits of £6.6m –its first in a decade – for the year to June 30.
But rapid growth from brands such as Very and Isme, where revenues jumped by a fifth last year, could push operating profits at the group to between £25m and £30m next year.
An accounting switch to IFRS standards would mean that Shop Direct would no longer be hit by amortisation charges of about £20m related to the group’s buyout of the catalogue division of former FTSE 100 retailer GUS in 2003. This would feed through to the group’s bottom line, pushing it to nearly £50m, if the company goes ahead with the switch, estimate analysts.
Such a performance would put Shop Direct on a par with rivals such as Asos, which had pre-tax profits of £55m last year off revenues of £770m, and top off a remarkable 10-year turnround at the group.
The potential jump in profits comes after a decade of losses at Shop Direct, as the business shifted from its core catalogue business to an online model. The business lost nearly £60m in 2012 alone.
Now about 85 per cent of transactions from the group are online, with 36 per centtaking place on mobile devices
. Alex Baldock, chief executive, predicted that “every transaction” will involve a mobile device at some point from next year.
“We have been taken by surprise at how fast this is growing,” said Mr Baldock.
About bambooinnovator
Bamboo Innovator 