Shop Direct close to £150m financing deal - report
Shop Direct’s Very operation may be one of the biggest and most successful online retailers in the UK, yet the parent company is still facing a number of problems just like its peers in the sector. But a report on Tuesday said some of those problems could soon be eased.
Advisors to its owners, the billionaire Barclay brothers, said it’s “only days away from agreeing a crucial £150 million of financing needed to fill a funding hole” at Shop Direct.
The report, in the Times, said the funding will take the form of an equity injection from the controlling family, although nobody at the business has commented directly on this.
The company’s problems differ from those of some other fashion retailers as Very is still generating healthy sales, even though its portfolio-mate Littlewoods is struggling. Instead, it’s been hit by a deluge of payment protection insurance (PPI) mis-selling claims due to the August deadline for consumers to make such claims.
The provision for meeting PPI mis-selling claims is what has driven the need for the extra funding as like many former traditional catalogue retailers where customers bought goods on credit, the company also sold PPI. Its activities on this front have hit it hard as so many of its customers bought on credit.
The general future of the business is also unclear as its owners, who also own The Ritz hotel and Telegraph newspapers, are seeking to divest many assets.
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