Studio Retail Group explores sale options as it sees record trading performance
Studio Retail Group, formerly known as Findel, is to conduct a strategic review of the business, including a possible sale, as it reports revenue of £268 million in the 26 weeks to 15 September 2020, up 17.2%.
Pre-tax profits increased 199% to £15 million, compared with only £5 million in 2019.
The group reported that improved infrastructure, a strengthened online offering and continued support from colleagues helped it respond well to increased demand.
Studio also confirmed it had in October received a letter from Frasers Group, who own approximately 37% of the group's share capital, stating that they believe that the Group is "misunderstood by the market and as a consequence, significantly undervalued" and "although this may be fixable over the long-term, the Group should conduct a strategic review".
In light of the letter and an upcoming CEO succession, the Studio Board determined that it is an appropriate point to undertake a comprehensive review of the strategic options open to it in order to maximise value for shareholders.
The options put forward include a sale of the Group, which is due to be conducted under the framework of a "formal sale process".
The Group's two largest shareholders, Frasers and Schroders, who have a combined shareholding of approximately 56% of the share capital, have both indicated their support for such the review.
Studio rejected a £139 million takeover bid from Frasers last April, claiming it undervalued the firm.
Frasers-owned Sports Direct had run trials selling its clothing brands online via Studio after first investing in the group in 2015, before gradually building up its stake in the firm.
Frasers has been steadily buying up swathes of the high street in recent years and is now in talks over a possible rescue deal for collapsed department store Debenhams.
Phil Maudsley, Group CEO, commented: "I am very proud of the way that this group has responded over the last few months to the challenges of COVID-19. These interim results are testament to the strengths of our digitally-focussed value business and the ability of our colleagues and customers to adapt rapidly to change.
"Our strategy to grow the Studio customer base and increase our customers' spend with us, supported by our flexible credit offer has delivered a record trading performance which underpins our confidence in the Group's medium-term growth prospects."