Very Group Suffers £500 Million Pound Loss as Barclays Prepare for Exit

The Very Group, the British retail powerhouse behind Littlewoods.com, has reported a staggering pre tax loss of £505.4 million for the year ending June. This marks a dramatic reversal from the previous year’s profit of £16.3 million and comes as the company’s owners, the Barclay family, move closer to relinquishing control of the business amid mounting financial strain.

The sharp loss was driven by the write off of a £524.8 million intercompany loan owed by the Barclays’ holding company. The move is seen as a pivotal development in the group’s future, as the family seeks to stabilise its considerable business interests, battered by years of heightened pressure and internal disputes. The write down, described as a one off accounting item by Chief Executive Robbie Feather, is said to have no immediate impact on cash flow or trading performance.

Talks are at an advanced stage regarding a sale or partial sale of the Very Group. Lenders including Abu Dhabi based IMI and US private equity giant Carlyle are engaged in refinancing negotiations. Carlyle, already a significant lender, is considered the most likely contender to assume control, with the transition expected to occur through a debt for equity swap, and IMI also poised to take a stake. The conclusion of these talks, originally anticipated for October, is now expected in November.

The online retailer’s fortunes have faltered since the pandemic. During the crisis, Very posted robust growth and eyed a potential stock market float in 2022. However, the return of consumers to the high street and rising pressure on household incomes have weighed heavily on digital sales. The company’s overall sales slipped 1.8 percent to £2.09 billion in the year to June, with fashion and electronics most affected by an intensely competitive and discounted retail market.

Despite falling sales, adjusted earnings before interest, taxes, depreciation and amortisation rose by 15.9 percent to £307.1 million, reflecting management’s renewed focus on profitability. The group’s finance arm, Very Finance, logged a slight dip in revenue to £433.6 million and no dividend was paid, following a £3.8 million payout the prior year.

One notable development has been the revival of the partnership with Nike, returning to the Very platform following a brief shift by the sportswear giant to a direct to consumer model. Feather hailed this as a positive sign for Very’s brand credentials and its ability to attract major partners. He also voiced support for a more level fiscal playing field, citing the tax advantages enjoyed by newer online entrants to the UK market such as Shein and Temu. Chancellor Rachel Reeves is expected to address loopholes affecting British retailers in the upcoming autumn budget.