Studio Retail Group sees improved Christmas performance but warns of shipping issues impact
E-commerce value retailer Studio Retail Group today announced it saw improved performance on Black Friday and the important Christmas period, although it warned of market-wide shipping issues adding downward pressure to profit.
Trading improved as the quarter progressed, helped by greater availability of stock in November and December when key shipments were eventually undocked. Product sales in the eight weeks prior to the Interim Results announcement on 25th November 2021 were down 21% against the prior year.
In the remaining five weeks of the quarter, which included Black Friday, product sales were 9% ahead of the prior year, bringing the performance for Q3 as a whole to 10% below the strong performance seen during the second national lockdown period in 2020/2021.
Compared to the same period in 2019, Q3 product sales were up 18%, bringing the total growth against FY20 for the first 39 weeks of the year to +28%.
Studio Retail Group also reported that the supply-chain challenges faced in 2021 not only caused higher shipping costs but also led to late-arriving unsold stock of continuity ranges, which will now be sold throughout 2022. The group says that this has "led to a higher level of inventory than normal at this time of the year."
Paul Kendrick, Group CEO, 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. The trading performance over Christmas, with sales up 18% over two years, shows our offer is resonating with a customer base of 2.3m. We will continue to drive the long-term profitability and success of the group."
Looking ahead, Studio Retail Group said that the third national lockdown at the start of 2021 created unusually active and favourable trading conditions for in Q4 last year. The company now expects trading to revert to more normal conditions in Q4 this year, assuming no further lockdown restrictions.
Demand in the early weeks of January has been "relatively subdued", with some margin erosion as the company cleared some seasonal stock that could not be carried forward.