Studio Retail Group PLC Trading Statement (5660K)
23 Abril 2020 - 01:00AM
UK Regulatory
TIDMSTU
RNS Number : 5660K
Studio Retail Group PLC
23 April 2020
23 April 2020
Studio Retail Group plc ("SRG" or "the Group")
Trading Update
SRG is today providing an update on recent trading in its Studio
and Education businesses.
Phil Maudsley, CEO of SRG, commented:
"I would like to thank each of our colleagues for their hard
work and committed approach during this unprecedented period. I am
grateful for their continued support and I hope that our service
has helped to make our customers' lives that little bit easier
during this lockdown period. "
Studio
Our primary concern has been, and remains, the safety and
wellbeing of our colleagues and customers. In light of the
government guidance on social distancing and hygiene for online
retailers following the lockdown announcement on 23 March, Studio
moved quickly to implement appropriate processes to protect the
welfare of its colleagues. It also worked closely with its
logistics partners to ensure that deliveries could continue to be
made to customers in a safe manner. As a result, Studio has been
able to trade well ahead of the prior year during the lockdown
period, seeing particularly strong demand for ranges such as toys,
games, electricals, fitness and garden.
Given the external environment, we are taking a prudent and
dynamic approach towards stock intake for the summer period,
particularly on clothing, in order to de-risk the business in
anticipation of a highly competitive marketplace once the lockdown
for high-street retailers is eased. We thank our suppliers for
their cooperation and support.
The business saw a good cash collections performance from its
credit portfolio during the important period between Christmas and
Easter, although we anticipate that customers' incomes will come
under sustained pressure in the coming months due to the
coronavirus. In line with guidance from the FCA, we will offer
appropriate forbearance to those customers that require relief. To
date, requests for forbearance caused by coronavirus amount to c.1%
of the total receivables balances, although this may increase
depending on the length and severity of lockdown restrictions.
In anticipation of the lockdown in mid-March, the business took
swift steps to conserve cash, including deferring a number of
projects involving external consultants and cancelling
discretionary expenditure until conditions become clearer. Internal
resource has instead been diverted in the near-term into
successfully adapting key systems to enable as many non-warehouse
colleagues as possible to work effectively from home. A small
number of colleagues whose roles cannot be performed from home and
who are either vulnerable themselves, or who are caring for those
who are, have been furloughed under the Coronavirus Job Retention
Scheme although remain on full pay.
Education
Schools across the UK closed from 18 March to most pupils, with
earlier closure dates seen across international markets. Demand
since then has been at around 20-30% of the levels we would
normally expect to see at this time of year. The majority of
non-warehouse staff have been furloughed on full pay for the time
being, although this will be kept under close review pending new
guidance on the reopening of schools.
Liquidity
The Group's debt facilities comprise a revolving credit facility
of GBP85m and a securitisation facility supporting Studio's credit
receivables of up to GBP200m. As at 27 March 2020 the RCF was fully
drawn, resulting in net debt of c.GBP53m or cash on balance sheet
of GBP32m. This headroom is around GBP5m better than we would
otherwise have expected to see due to a particularly cautious
approach to cash outflows in the week following the lockdown
announcement, which has since been reversed. Drawings under the
securitisation facility stood at GBP198m at the end of March. At
present, whilst Studio continues to trade, the Group has sufficient
liquidity for its near-term requirements without requiring recourse
to government funding schemes. We have strong relationships with
our lending banks, and we continue to plan for a medium-term
refinancing once the sale of Education completes.
FY21 Guidance
Despite strong trading in Studio in recent weeks, given the
level of uncertainty in the outlook around the impact of the
coronavirus on the Group, together with the uncertainty on when the
sale of Education will complete (see below) it is not yet possible
to assess with certainty the impact this will have on the Group's
financial performance for the new financial year. As such, the
Company is not giving any guidance for FY21 at this stage.
Disposal of Education
As announced on 22 April, the Competition & Markets
Authority has now started its formal Phase 1 review of the proposed
sale of Education, which we currently anticipate will complete in
August 2020 subject to obtaining the necessary clearance.
Results for the year to 27 March 2020
The Group normally publishes its full-year results in early
June. Currently, it is not possible to confirm a date for this
announcement, in part due to the practical difficulties of
preparing and auditing accounts during lockdown, and also due to
the inherent challenges in assessing the forward-looking bad debt
provision required by IFRS9 in light of the material deterioration
in the UK's economic forecasts. Before taking account of any
incremental bad debt charge linked to coronavirus, the underlying
PBT from continuing operations based upon unaudited management
accounts is likely to be towards the middle of market forecasts.
Revenue for the full year in Studio was c.3% ahead of prior year,
and up c.5% in the second half of the year. An update on the timing
of the release of results will be provided in due course.
Enquiries
Studio Retail Group plc 0161 303 3465
Phil Maudsley, Group CEO
Stuart Caldwell, Group CFO
Tulchan Communications 020 7353 4200
Will Smith
Notes to Editors
Studio Retail Group currently contains market leading businesses
in the UK digital retailing and education supplies markets. It is
primarily a retailer and distributor, handling and supplying
specialist products manufactured by third parties.
The Group's activities are currently focused in two main
operating segments:
-- Studio - a leading UK digital value retailer, primarily
trading via the Studi o brand; and
-- Education - the second largest listed independent supplier of
resources and equipment (excluding information technology and
publishing) to schools in the UK and overseas. We announced the
sale of this business to YPO in December 2019 for GBP50m, subject
to approval from the Competition & Markets Authority, which is
expected to complete in due course.
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END
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