Something is not adding up …it’s the Friday Blog!

Published on: 18th February 2022

No doubt about the most unexpected story of the week – no, not the grand old Duke of York paying out £12m to someone he claims he had never met for something he claims he never did, but the potential collapse into administration of online retailer Studio. Not a single supplier I have spoken to this week saw that coming – nor indeed did the credit insurer community, which still had Studio rated as 100% safe earlier this week. It is not like credit insurers to get something so spectacularly wrong.

So, what happened? There was a hint that all was not entirely well two weeks ago, when Studio issued a financial update that saw profit expectations being adjusted down from £35m to £28-30m for the financial year. Still, not too shabby, all things considered. Accompanying that announcement was a quote from the chief executive which stated that “the fundamentals of Studio’s business model are solid.” So how do you get from there to needing a £25m loan to fund surplus stockholding, then appointing receivers when it couldn’t reach agreement with its lenders – all in under two weeks?! Something is just not adding up…

Of course, it is important to bear in mind that the largest investor in Studio is long-term friend of this column, the infamous Mike Ashley, via his Frasers Group operation. He owns just under 30% stake in the Studio business and was thwarted in his bid to take the firm over completely just three years ago. I suspect this may have more relevance to this situation than the sale of Findel last year, which some observers have suggested could be a major contributory factor behind Studio’s current plight. Let’s be honest, Mike has ‘form’ in this area; it wouldn’t be the first time a company he is involved is taken to the brink, before he rides to the rescue at the last minute with a cut-price deal. Studio’s share price was suspended this week at 115p, having peaked at 300p only last May.

So, can we expect Mike to ‘save the day’ again? Suppliers seem confident that the situation will be resolved, and I hear rumours that Studio buyers are postponing, rather than cancelling orders. That suggests something is going on behind the scenes. I hope so, because it would be a shame to see Studio become a casualty so early in the year. Keep an eye on that share price, assuming a solution can be found…

Mike Ashley is not the only shareholder who may have been making mischief this week. Over in the US, according to the Wall Street Journal, Hasbro has received demands from an ‘activist shareholder’ – Alta Fox Capital Management – which wants Hasbro to add new members to its board and spin off its lucrative Wizards of the Coast and digital gaming unit, which includes Dungeons and Dragons and Magic: The Gathering. Alta Fox has even gone so far as write to Hasbro shareholders, nominating five potential directors it feels should be appointed to the board. It also apparently wants Hasbro to scrap its current strategy for developing brands, a blueprint put in place by the company’s late CEO Brian Goldner. I must say that this feel like a mean-spirited manoeuvre – especially from a timing perspective – with new CEO Chris Cocks set to take up his new position in a weeks’ time. All companies have to constantly evaluate their strategies to ensure they remain the best route forward, but Hasbro’s 2021 results were excellent, so it doesn’t seem to me that such a dramatic change in direction is necessary at this time….

In other news, it was announced this week that Adrian Whyles will be leaving his role as managing director of PlayMonster UK at the end of February at his own request. We wish Adrian all the best with what comes next. It doesn’t sound as though there are imminent plans to replace him, as the announcement also confirmed that the UK team will now report into the recently announced PlayMonster global organisational structure.

Meanwhile Amazon has finally reached a truce with Visa over payment fees. Visa cards will now continue to be accepted at all stores and bricks-and-mortar locations as part of a global agreement between the two companies. The dispute started last November when Amazon announced it would stop accepting Visa credit cards issued in the UK, blaming the high transaction fees which it said were being charged by Visa. It’s likely that none of us will ever know which side backed down, but Amazon traders and consumers will certainly be pleased that common sense has prevailed.

It now seems to be generally accepted that Amazon sells more toys than any other toy retail account. I have not seen NPD’s breakdown of retail market shares (it is an extremely well-guarded piece of information), but Kantar sent us a press release this week, which offered its own interpretation of Q4 toy sales and retail performance. I must confess to being a little surprised at some of the retail shares according to Kantar’s data: John Lewis at 2.8%, significantly higher than The Entertainer at 2.1% – really….??? I’m also mildly sceptical of TK Maxx having the same 2% share as The Entertainer, while M&S, Aldi and The Works at 1% feels ‘generous’ to say the least. But hey, who am I to disagree with ‘data.’ I’d be interested to know what other people think – am I alone in questioning the accuracy of these numbers?

Finally, good luck to all of the nominees for the US Toy of the Year awards tonight (TOTYS) – we’ll bring you details of the winners next week. I’m intrigued to see how the afterparty goes, given it is being held in the metaverse rather than in person this year. Guests will apparently be able to mingle and chat “face-to-face” (or, avatar-to-avatar). The in-person event is usually quite ‘lively’, with some amusing sparring between a few industry heavyweights thrown in for good measure, so it will be fascinating to see if everyone behaves themselves in the metaverse tonight. Popcorn at the ready…