Sales Soar At Feuding Billionaire Barclay Brothers’ Very Group During Lockdown

Very Group, the online department store owned by the billionaire Barclay brothers Sir David and Sir Frederick, is one of the few big winners from the Covid-19 lockdown in the U.K. On Friday it announced that revenue for the fiscal year through June exceeded $2.6 billion, boosted by a 36% jump in sales during the spring quarter that ended June 30.

The increased revenues at Very come as something of a surprise, with the online department store described by one analyst as “in better trading shape than one might have imagined.” Last year the company, which is wholly-owned by the Barclay brothers and previously called Shop Direct, disclosed that it had $3.7 billion in liabilities. The new disclosure of Very Group’s revenues doesn’t provide details on its debt.

It’s been a tumultuous year for the billionaire twins. The lockdown period was beset with controversy as the succession war between the twins escalated into proceedings at London’s High Court over allegations that Sir David’s son Alistair secretly recorded conversations between Sir Frederick and his daughter Amanda while they were in a room at the Ritz Hotel, then owned by the brothers.

The estranged brothers and their progeny can be pleased that one of their most significant holdings looks to have turned a corner.

Very, Solid Growth

Very.co.uk, the online department store born out of Shop Direct, which itself was created out of a merger with Littlewoods, announced during Friday’s trading update that a 65% increase in website traffic had driven “exceptional” retail sales growth of 36% in the three months through June. The strong quarter for the outlet that sells everything from Nintendos to summer dresses to garden furniture pushed sales growth up just a bit over 10%, helping revenue exceed $2.6 billion (£2 billion).

Very has not yet disclosed net profits or loss. The group said it expects EBIDTA will be between $333 million and $353 million for fiscal 2020. While losses last year hit $222 million.

Henry Birch, Very Group CEO, said in a statement, “As in the financial crisis, our business model proved adaptable and resilient in the face of volatile conditions and changing consumer buying patterns. We experienced peak trading levels and recruited unprecedented levels of new customers as our online multi-category model supported by financial services came to the fore.”

Adding, “Despite operational challenges caused by COVID, we adapted and pressed on.”

A spokesperson for Very said there would be no further comment on the $3.7 billion liability figure before the release of the audited accounts in September.

Recession

Having watched the slow decline of U.K. retail for years, Richard Hyman of Richard Talks Retail tells Forbes, “I think against an extraordinarily difficult background … the numbers are very impressive.” Hyman stresses the importance of a model that combines online retail across a genuine “department store” range of goods with the credit offering best suited to the kind of “competitive landscape” for retailers in the recession.

“Extending credit,” or buying items on credit, typically at annualized interest rates of 39.9% , Hyman adds, “is about risk. [For] many retailers the credit offering is a bolt on and their expertise is in retailing. Very has got finance and managing credit and risk at the very heart of their skill set.”

On the Barclay dynasty who own Very Group, Hyman adds the family will be “impressed” with the team they put in place, “The Barclay brothers obviously have got in their mind – this is an asset they may want to sell at some stage,” explaining that it’s gone from being something of a liability to a “very solid building block that really shows that the business was actually in better trading shape than one might have imagined.” 

On the group’s liabilities, Hyman says that although “having a lot of debt is never good, having some debt is fine in a cash generative business.” He says Very’s leadership is now “in a pretty good position” to start addressing the problem.