Company Announcements

30 September 2020                                                                                                                                   

Studio Retail Group plc ("SRG" or "the Group")

Strong retail performance continues at Studio, driven by strength of its online offer

Studio Retail Group plc, a leading digital value retailer, today provides an update on trading for the first 26 weeks of the financial year ("H1").  The Group's primary business, Studio, has seen a continuation of its strong retail trading performance in the early weeks of its new Autumn/Winter season, with kidswear, gifting and early Christmas ranges performing particularly strongly.

In the last 6 weeks since the Group's FY20 results announcement on 24 August, product sales have grown by 30% against the equivalent period from the prior year. This brings the total products sales growth for H1 to 39%, as shown in the table below:

The active customer base has grown by 15% in the last 12 months, currently standing at 2.1m customers, of which just under 1.4m customers have an active credit account.

Online sales now represent over 90% of total orders, with the Studio App having been downloaded more than 700k times in under a year since its launch.  Year-on-year online growth in our Home & Leisure ranges in FY21 has been 80%, with online Clothing & Footwear sales growing by 22% despite an active decision to de-risk more seasonal clothing ranges at the start of lockdown.  We did see some decline in our legacy telephone and written ordering channels but these now account for less than 10% of the business.

The de-risking of clothing ranges allowed us to exit the Spring/Summer season with a clean stock position.  The impact of this, alongside mix effects across the overall product ranges, led to the margin rate achieved in H1 being broadly flat against the prior year.

The value of credit receivables eligible for securitisation funding has grown by 16% over the last year, so we are pleased to have recently agreed an increase of £25m in the securitisation facility which now stands at £225m committed until the end of December 2022.  Financial services revenue has grown by c.5.5% in H1 and we have yet to see a material change to the collections performance, although we continue to anticipate more challenging conditions for our customers later in the year or early 2021. As a result, our liquidity remains strong and well ahead of normal seasonal patterns.

The peak trading period of Q3 covering Black Friday and Christmas is still ahead of us, which historically accounts for around 40% of the full year's product sales.  Notwithstanding the inherent uncertainties that continue to be presented by Covid-19, we currently expect the adjusted profit before tax from continuing operations* (including the impact of IFRS 16) for FY21 to be ahead of our previous internal expectations.

Findel Education has seen its trading performance return to normal seasonal levels in recent weeks.  We are continuing to support YPO in achieving clearance from the Competition & Markets Authority for the sale of the business and the parties have agreed to extend the longstop date within the sale agreement to 11.59pm on 30^th October 2020.

We will be announcing our interim results on 8 December which will allow us to give a further update on peak season trading.

Enquiries

Studio Retail Group plc                                     0161 303 3465

Phil Maudsley, Group CEO

Paul Kendrick MD Studio Retail Ltd and CEO Designate

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 Studio 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 £50m, subject to approval from the Competition & Markets Authority, which is expected to complete in due course.

* The adjusted profit before tax from continuing operations for FY20 of £27.3m is calculated as follows: