Having been denied a short-term loan requested last month, Studio Retail Group and subsidiary Studio Retail are set to appoint administrators.
According to Insider Media, a notice of intent to appoint administrators is about to be filed for the online digital retailer business. A notice has been issued to the London Stock Exchange
The group reported a surplus stockholding in January, and said it is in need of additional working capital funding while the excess inventory is sold through. Studio Retail Group requested a short-term loan of £25m from its lending banks to fund the surplus stockholding, which it said it believed would be sufficient to enable it to sell through the stock. However, following discussions with its UK lenders, the business has not been able to reach agreement with them to provide the additional funding required.
Subsequently, the board now intends to file a notice of intent to appoint administrators for SRG and Studio Retail, its wholly owned subsidiary, “as soon as reasonably practicable”. The statement to the London Stock Exchange added: “The board is taking this action to protect the interests of its creditors”.
Earlier this month, the company warned of lower than expected profits and price increases caused by higher shipping costs and delayed stock, despite improving its performance on Black Friday and throughout the Christmas period.
In a trading update for the third quarter period, to 24th December, the group reported sales in the eight weeks prior to 25th November were down 21% against the previous year, but in the remaining five weeks of its third quarter, they were 9% ahead as key shipments started to arrive.
At the time, Studio Group chief executive Paul Kendrick commented: “The fundamentals of Studio’s business model are solid, notwithstanding the market challenges that have been exacerbated by our over-commitment to stock in the near term.”
Studio Retail Group today employs about 1,200 staff across the UK, Philippines and Shanghai selling products including discounted branded clothing, footwear, toys and gifts online.
