Online fashion retailer Shop Direct has moved to a loss in the first nine months of the year after incurring GBP100m in costs related to Payment Protection Insurance claims.

The loss for the period ended 31 March amounted to GBP10.7m (US$14.3.m) from earnings of GBP57.4m in the prior year period. Gross margin narrowed 2.2 percentage points to 38.8% driven by the continued switch to Very from Littlewoods and the increased contribution from the lower retail margin electrical division.

Group revenues, comprising retail and financial services, increased by 1.6% to GBP1.51bn from GBP1.49bn a year earlier, driven by Very, which continued to outpace the online retail market, the company said.

Very revenues grew 10.6% in the period to GBP1.06bn, benefiting from its combination of "famous brands, mobile-first customer experience" and options to spread the cost of purchases using credit.

The company's managed decline in Littlewoods continued with revenue down 15% to GBP445m. Retail revenue grew 1.2%.

Clothing and footwear sales edged up 0.6%, driven by childrenswear and sportswear.

"We continued to benefit from our department store model, which provides resilience against adverse movements in individual product categories," the retailer said.