TIDMSTU
RNS Number : 1597L
Studio Retail Group PLC
11 January 2021
11 January 2021
Studio Retail Group plc
("SRG" or "the Group" or "the Company")
Trading Update
Strong trading in Q3 results in an increased level of profit
growth
SRG today gives an update on its trading for the key Q3(1)
period and on the Strategic Review announced on 8 December
2020.
Colleague safety
We continue to take steps to ensure the safety of our colleagues
in both of our businesses whilst we meet our customers' needs under
the current Covid-related restrictions. We have minimised the
number of colleagues on our sites and have further enhanced social
distancing procedures. We note this weekend's announcement from the
Government to widen the community testing programme for
asymptomatic cases. Studio, like other large employers, is already
working with its local authorities to administer these lateral flow
tests as part of our additional precautionary measures.
Q3 Trading
The strong trading trends reported with the Interim Results for
Studio, our online value retail business, continued throughout
December. Studio saw record levels of trading during its peak Q3
trading period that included Black Friday and Christmas. Product
sales in Q3 were 32% ahead of prior year, with gross margin rates
from product sales in this period 440bps higher than in 2019.
The customer base currently stands at 2.3m including 1.5m active
credit account customers. Nearly 1m customers have now downloaded
the Studio App which has produced over 20% of sales this year.
Our education resources provider, Findel Education, saw
improving rates of sales growth, with total sales in Q3 up 15% on
prior year. The recent announcement of school closures will
inevitably lead to a reduction in sales once again in the coming
weeks.
The unaudited adjusted profit before tax(2) for the Group for
the 39 weeks to the end of December 2020 was c.GBP16m ahead of the
equivalent period in FY20(4) , compared to year-on-year growth of
GBP6m seen in H1.
The growth in the credit customer base and product sales helped
Eligible Receivables(3) to grow by 19% to GBP349m at this seasonal
high point. Core net debt(5) stood at GBP37.3m at the end of
December 2020 (December 2019: GBP53.2m) implying that the committed
headroom is GBP32.7m, with the securitisation facility fully drawn
at GBP225m.
Strategic Review and formal sale process
On 8 December 2020, the Board announced that it was undertaking
a comprehensive review of the strategic options open to it in order
to maximise value for shareholders. These options include a sale of
the Group which will be conducted under the framework of a "formal
sale process" in accordance with the Takeover Code. The process is
ongoing and further announcements will be made as appropriate.
The next scheduled trading update will be at the end of
March.
Phil Maudsley, Group CEO, commented:
"This was an outstanding Q3 and peak trading performance across
the Studio business. The strong sales momentum continued through
the period, demonstrating the strength and attractiveness of our
online value retail offer.
"I am hugely proud of all my Studio colleagues and I would like
to thank them for their role in successfully serving more customers
than ever before."
Notes:
(1) 13-week period ended 25 December 2020
(2) Adjusted profit before tax is stated before individually
significant items and mark-to-market movements on derivatives.
(3) Eligible Receivables means the proportion of the trade
receivables of Studio which are eligible to be funded in part from
the securitisation facility. This is essentially customer accounts
which are either up to date or one payment in arrears.
(4) Adjusted profit before tax for the 39 weeks to 25 December
2020 was GBP31.3m (December 2019: GBP14.9m). The full-year adjusted
profit before tax for the 52-week period ended 27 March 2020
("FY20") was GBP29.2m.
(5) Core net debt means drawings under the Group's revolving
credit facility net of cash held by the Group.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014. For the
purposes of MAR and Article 2 of Commission Implementing Regulation
(EU) 2016/1055, this announcement is being made on behalf of the
Group by Stuart Caldwell, Group CFO.
Enquiries
Studio Retail Group plc +44 161 303 3465
Phil Maudsley, Group CEO
Paul Kendrick, MD Studio Retail Ltd and CEO Designate
Stuart Caldwell, Group CFO
Stifel Nicolaus Europe Limited (sole financial adviser) +44 20 7710 7600
Matthew Blawat
Ashish Burman
Francis North
Tulchan Communications +44 20 753 4200
Will Smith
Forward-Looking Statements
This document contains statements which are, or may be deemed to
be, "forward-looking statements" which are prospective in nature.
All statements other than statements of historical fact are
forward-looking statements. They are based on current expectations
and projections about future events, and are therefore subject to
risks and uncertainties which could cause actual results to differ
materially from the future results expressed or implied by the
forward-looking statements. Often, but not always, forward-looking
statements can be identified by the use of a date in the future or
forward-looking words such as "plans", "expects", "is expected",
"is subject to", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", "believes", "targets", "aims", "projects"
or words or terms of similar substance or the negative of those
terms, as well as variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"should", "would", "might" or "will" be taken, occur or be
achieved. Such statements are qualified in their entirety by the
inherent risks and uncertainties surrounding future expectations or
events that are beyond the Group's control.
Forward-looking statements include statements regarding the
intentions, beliefs or current expectations of the Company
concerning, without limitation, future revenues, economic
performance, financial condition, and future prospects.
Such forward-looking statements involve known and unknown risks
and uncertainties that could significantly affect expected results
and are based on certain key assumptions. Many factors may cause
the actual results, performance or achievements of the Studio
Retail Group to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements.
Neither SRG nor any of its Directors, officers or advisers
provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any
forward-looking statements in this document will actually occur.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
document.
Other than in accordance with its legal or regulatory
obligations (including under the Listing Rules and the Disclosure
Guidance and Transparency Rules), SRG is not under any obligation
and SRG expressly disclaims any intention or obligation to update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
No Offer or Solicitation
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities, or the solicitation of any
vote or approval in any jurisdiction, pursuant to this announcement
or otherwise.
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END
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