Studio Retail Records Loss of £75m before Frasers Group Rescues
In a recent revelation, Studio Retail, an online retailer headquartered in Accrington, reported a loss of over £75m in the year it was saved from administration by Mike Ashley’s Frasers Group. The company, which owed more than £80m to its creditors, was acquired by Frasers Group in a deal worth £26.8m.
Newly-filed accounts with Companies House have exposed Studio Retail’s pre-tax loss of £75.6m for the year ending April 24, 2022. This marks a significant decline from the £56.6m profit recorded in the previous 12 months. Additionally, the company’s revenue, including credit interest, dropped from £578.5m to £556.9m during the same period.
Studio Retail attributed the decline in revenue and gross profit to various challenges, including supply chain issues leading to delays in the arrival of key seasonal stock for the peak trading period before Christmas. Despite heavily discounting multiple category ranges, the company maintained a large stock holding into the New Year due to difficult market trading conditions.
Earlier this year, Studio Retail’s chief executive resigned, as reported by BusinessLive. However, the company has recently announced plans for expansion, aiming to create 30 new jobs in its first major growth initiative since the rescue.
Frasers Group’s half-year results from last year shed some light on Studio Retail’s post-April 2022 trading performance. The group expressed its expectation of a significant reduction in real earnings for Studio Retail’s customer base due to the current cost of living crisis. While the adverse impact on payment and arrears performance has been less severe than anticipated thus far, the effects are projected to persist in the future. Consequently, an adjustment of £20m (previously £40m as of April 24, 2022) has been applied to the impairment model output in determining the provision.
Overall, Studio Retail’s financial struggles and subsequent rescue by Frasers Group highlight the challenges faced by the online retailer and the wider retail industry in navigating changing market dynamics and supply chain disruptions.
