Yahoo Finance Studio Retail collapses into administration with 1,000 jobs at risk
Studio Retail Group (STU.L) has collapsed into administration, placing as many as 1,000 jobs at risk.
The company, which counts Mike Ashley as one of its largest investors, called in administrators on Monday after failing to secure an urgent £25m ($33.8m) loan to help sell surplus stock.
Requests for additional funding, which the company "believed was sufficient to enable it to sell through the stock to customers", were rejected by its lending banks.
"Following detailed discussions with our UK lenders, the company has not been able to reach agreement with them to provide the additional funding Studio requires,” Studio Retail said in a brief statement.
“The board therefore now intends to file a notice of intention to appoint administrators to SRG and Studio Retail Limited, its wholly owned subsidiary, as soon as reasonably practicable.
"The board is taking this action to protect the interests of its creditors. Further announcements will be made as appropriate."
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Following consultation with the Financial Conduct Authority (FCA), shares in the online retailer, formerly known as Findel, have now been suspended on the London Stock Exchange (LSEG.L).
Last month the Lancashire-headquartered company saw its stock price plunge after it issued its second profit warning in two months.
It said its profits were set to be lower than market expectations and that it would be forced to raise its prices. The firm blamed transport delays and soaring shipping costs for huge stock surpluses, which were eating into cash and eroding working capital.
In a statement issued at the end of last month, the business said its adjusted pre-tax profits for its full financial year are likely to be between £28m and £30m, down from the current market expectation of £35m.
The company was first established as a catalogue gift retailer but later expanded online to sell clothes, home, and electrical products. It has around 2.5 million customers and made £578.6m in revenue during the last financial year.
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Ashley’s Fraser’s Group (FRAS.L) has held a 28.9% stake in the company since 2015.
The retail tycoon attempted to take over the business in 2019 at 161p-a-share , however, it is not yet clear whether he will try to buy Studio Retail out of administration this time.
Danni Hewson, financial analyst at AJ Bell, said: “Mike Ashley’s Frasers Group is the biggest shareholder in Studio Retail with a 28.89% position and his tactic has often been to wait until a retailer goes into administration before pouncing with a cut-price deal.
“He’s a shrewd operator and would rather wait until a company is on its final breath before coming in with a lifesaving offer.”
