Studio falls into administration, placing 1400 jobs at risk
In the region of 1,400 jobs are at risk after Studio Retail Group formally entered administration, according to reports.
The Lancashire-headquartered online trader has appointed Teneo to lead the process, a report in The Times has said.
The group, whose largest shareholder is Mike Ashley’s Frasers Group, issued a statement on Monday, February 14, that it was set to call in the administrators. The listed company made the move after warning its profits are set to be lower than market expectations and is to raise its prices.
In a statement issued at the end of January, the business said its adjusted pre-tax profits for its full financial year are not likely to be between £28m and £30m, down from the current market expectation of £35m.
Following that update the group’s share price slumped by more than 35%.
In the statement issued last week, the company said it had requested a short-term loan of £25m from its lending banks to fund surplus stockholding which it “believed was sufficient to enable it to sell through the stock to customers”.
It added: “Following detailed discussions with our UK lenders, the company has not been able to reach agreement with them to provide the additional funding Studio requires.
“The board therefore now intends to file a notice of intention to appoint administrators to SRG and Studio Retail Limited, its wholly owned subsidiary, as soon as reasonably practicable.
“The board is taking this action to protect the interests of its creditors.
“Following consultation with the FCA, the company has requested that the listing of the company’s ordinary shares of 10 pence each be temporarily suspended with effect from 7.30 a.m. on 14 February 2022.
“Further announcements will be made as appropriate.”
At the end of January, the group said demand in the early weeks of January has been “relatively subdued, with some margin erosion as we cleared some seasonal stock that could not be carried forward”.
It said that this had been partially mitigated through the bad debt performance, which was better than expected particularly due to improvements in the recovery rates achieved on defaulted debts.
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