19th Jun 2020 13:57
(Alliance News) - Studio Retail Group PLC on Friday reported a significant rise in sales as it said it will look into concerns raised by the UK Competition & Markets Authority regarding the proposed sale of Findel Education Ltd to Yorkshire Purchasing Organisation.
The retail and education company said its sales over the past 11 weeks climbed 55%, driven by strong demand for toys, games, electricals, fitness and garden equipment, with active customer numbers rising by 2 million measured on a rolling 12-month basis. Customer repayments have remained strong with requests for forbearance caused by the pandemic representing less than 4% of the total receivables balances.
Studio Retail said the demand for educational resources in its Findel Education business was much lower than expected due to school closures, but noted that the gradual process to reopen schools across the UK has resulted in improvement with sales in June to around 50% of levels of the same period in 2019.
Turning to the sale of Findel, the Accrington-based company said it will look closely at the concerns raised by the regulatory authority and consider how best to move forward.
In December, Studio had agreed to sell Findel Education to the Council of the City of Wakefield for GBP50 million, with the sale expected to complete in April. Studio had said cash realised from the sale will be used to make a voluntary payment to the company's defined benefit pension fund with the remainder used to reduce debt.
However, on Friday, the UK CMA said it has found the transaction raises competition concerns in the supply of resources to educational institutions in the UK. It stated it will refer the transaction for a phase two investigation unless the parties offer acceptable undertakings within five working days.
Looking ahead, Studio Retail said it has withdrawn its guidance for the current financial year ending March 27, 2021 due to Covid-19 related uncertainty, as well as the issues over the sale of Findel.
"I have been particularly pleased by the number of new customers we have welcomed to Studio in recent weeks. The overall market does remain volatile, and we are cautious about the risks to customer incomes for the remainder of the year. However, we have positioned ourselves strongly to manage these risks, and longer-term, we are well-positioned to respond to any permanent shifts in online consumer behavior," said Studio Chief Executive Phil Maudsley.
The company said it currently has committed headroom of around GBP55 million.
Full unaudited results for financial 2020 will be published in the second half of August.
Studio Retail shares were trading 16% higher at 211.00 pence each on Friday afternoon in London, but are down 11% from the start of the year.
By Ife Taiwo; [email protected].
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