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. "


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.


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.


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.


   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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April 23, 2020 02:00 ET (06:00 GMT)

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