FORMER Littlewoods group Shop Direct has cut annual losses, but admitted growth could suffer as it reins in customer credit to avoid bad debts.
The Speke-based group is transforming itself from a former catalogues giant into an online retailer, in response to shifting spending patterns.
Total group sales for the year to April 30 rose 7.4% to £1.7bn and online sales accounted for 49% of turnover on average, compared with 38% the previous year.
Financial director Steve Makin said, in the 20 weeks of trading since the year end, that has risen to 56%, which is on track for a 70% online sales target by 2011.
The business reported a 182% rise in earnings before interest, taxation, depreciation and amortisation of £96m.
However, the more conventional pre-tax benchmark revealed that losses before exceptional items narrowed from £181m to £114m, which Mr Makin said demonstrates the progress in “transitioning to a modern online retailer”.
The latest online developments include the launch of the iconic Woolworths brand onto the web after the store chain’s collapse last Christmas, the relaunch of Littlewoods Direct as Very.co.uk aimed at the fashion-conscious 25-35-year-old age group, and online expansion into Europe.
Mr Makin said Woolworths has attracted 4m visitors since its July debut, and Very.co.uk is on track: “We are expecting exciting things from Very.co.uk”
In general, he said the group is optimistic about the new financial year, but is adopting a cautious approach to its credit arrangements for customers.
“We are in difficult economic times and we are a business that offers credit to our customers so we are taking a more cautious approach to our lending criteria.”
He admitted: “We see a more modest level of growth in the coming period.”
Chief executive Mark Newton-Jones added: “We are pleased with the progress we have made in the past year, particularly in light of the current economic climate.
“We have continued to show growth in our online performance since May, but we are mindful of the tough economic climate we are facing, and as such we remain cautious about the outlook for the remainder of 2009 and 2010.”
