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.£16m ahead of the equivalent period in FY20(4), compared to year-on-year growth of £6m seen in H1.
The growth in the credit customer base and product sales helped Eligible Receivables(3) to grow by 19% to £349m at this seasonal high point. Core net debt(5) stood at £37.3m at the end of December 2020 (December 2019: £53.2m) implying that the committed headroom is £32.7m, with the securitisation facility fully drawn at £225m.
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 £31.3m (December 2019: £14.9m). The full-year adjusted profit before tax for the 52-week period ended 27 March 2020 ("FY20") was £29.2m.
(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.
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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.