Studio Retail, which was acquired by Frasers Group last year, has revealed that it had pre-tax losses of £75.7m ahead of the takeover.
Companies House has just published the full accounts for the Lancashire ecommerce firm, up to 24th April 2022.
They show that at the start of the financial year, the business was trading strongly. However, “supply chain issues” led to “significant delays” in the arrival of seasonal stock in the build up to Christmas.
Director, David Twigg, wrote in his summary:
“Difficult market trading conditions saw Studio maintain a large stock holding into the New Year despite heavily discounting multiple category ranges. Towards the end of the financial period, Studio experienced cash flow issues and the parent company, Studio Retail Group plc, filed for administration.
“During February 2022, Studio Retail stopped trading for two weeks before the acquisition by Frasers Group plc allowed the business to reopen.
“Credit account interest grew during the period to £132.5m (2021: £116.3m) however this was offset by a sharp increase in impairment losses on customer receivables resulting in a gross profit of £54.2m (2021: £70.6m).
“Studio recorded an operating loss of £67.4m (2021: operating profit £58.9m) and a loss before tax of £75.7m (2021: profit before tax £56.6m).”
He added that £15m had been set aside because “as a regulated entity, Studio Retail Limited, is subject to legal and regulatory reviews, challenges, and investigations during the ordinary course of business. All such material matters are periodically reassessed, with the assistance of external professional advisors where appropriate, to determine the likelihood of the Company incurring a liability.”
The accounts show that directors didn’t claim any dividends during the period, compared to £110,000,000 in 2021.
When comparing the 2022 accounts to the previous year, revenue was fairly similar £424m in 2022, £462m in 2021. It should be noted that its 2021 financial year was 52 weeks, but in 2022 it was 56 weeks, as it aligned its accounts with Frasers Group, so the figures aren’t directly comparable.
Cost of sales and impairment losses on customer receivables both increased, meaning its gross profit was down from £247m to £174m. With its cost base also increasing, the loss before tax for the period was £75.7m, compared to a £56.6m profit the year before.
A tax credit for 2022, meant its overall losses were £44.5m (2021: £46.3m profit).
