The Barclay family’s Very Group has blamed a surge in interest charges for a 92 per cent slump in annual profits.
The Liverpool-based online retailer reported profit before tax of £4.6 million in the year to July 1, which it said was because of the “heightened cost of funding”. Its financing costs rose by 43.5 per cent over the course of the year as a result of high interest rates on loans and bonds.
The Very Group has about £1.5 billion in securitised loans and bonds of £575 million in its operating companies, according to the Financial Times. Carlyle, the American private equity firm, which holds debt in the loan structure that backs Very, is said to be owed debts of more than £300 million, which sit in holding companies above these groups.
According to its annual report, Very had £1.4 billion on its debtor book, up by 6.6 per from the year before. Of that, 5.9 per cent was considered “bad” debt, down from 6.3 per cent.
Last month it was reported that Lloyds Banking Group was in talks with the Barclay family and Carlyle over a takeover of The Very Group. The lender holds a guarantee in the overseas holding companies controlling the group that is linked to the distressed debt behind the Telegraph newspaper titles, which are up for sale.
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Fitch, the credit rating agency, put Very’s bonds on a “negative outlook” last month, saying that it “reflected the material risk for TVG’s credit profile that could arise from a potential change of control through a full or partial sale of TVG by the Barclay family, TVG’s ultimate owner, as the family is addressing its credit obligations in other businesses with financial institutions”.
This month The Times revealed that Allianz Trade, formerly known as Euler Hermes, had withdrawn cover for suppliers to The Very Group amid concerns over its finances.
Dirk Van den Berghe, 63, the chairman of Very, said in the group’s annual report that “directors believe the likelihood of the financing arrangements of the wider group impacting the Very business to be remote and do not impact conclusions regarding the going concern assumption.”
Very grew out of the ailing Littlewoods business, which the Barclay twins, Sir David and Sir Frederick, bought in 2002 before merging it with the home shopping business of the Great Universal Stores conglomerate.
The company was gearing up for a stock market float last year and reported healthy sales and profits throughout the pandemic. Like other online retailers, it has been struggling with shoppers’ return to high streets and a squeeze on incomes.
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Group sales at the retailer, which sells products from washing machines to pyjamas, were broadly flat at £2.15 billion in the year to July 1.
Lionel Desclée, 44, chief executive of Very, said: “While the market will remain challenging, we’re confident our proven and resilient business model, which combines multicategory online retail with flexible ways to pay, will continue to deliver for our customers.”
