Studio Retail Group, an online retailer, was recently acquired by Frasers Group after facing a significant financial burden of over £80 million. Documents submitted by administrators Teneo to Companies House revealed that the company was sold for a mere £1, signaling the extent of its financial troubles. Alongside the purchase, £53.1 million in secured liabilities under its revolving credit facility and ancillary facilities were released.

At the time of administration, Studio Retail Group owed £50 million for its revolving credit facility and £3.1 million for other facilities. Additionally, the company had outstanding debts of approximately £4.7 million to HMRC and owed around £1,100 to employees for holiday pay and pension contributions. Teneo is currently awaiting a directors’ statement on the amount owed to unsecured creditors, and there may be funds available for distribution to them.

The disclosed documents also shed light on the supply chain disruptions that Studio Retail Group faced leading up to December 2021. These disruptions resulted in delays in stock receipt and an inability to meet customer demand. The company primarily sourced its stock from Asia, leading to long lead times that were exacerbated by the disruption. As a result of late-arriving stock and declining sales during the fourth quarter, the company was left with excess inventory.

In an effort to address its financial challenges, Studio Retail Group approached HSBC in January for an extension to its funding facility, but the request was denied. The company’s difficulties also caused several suppliers to halt their services, and credit insurers indicated that their coverage would be impacted.

Looking ahead, the acquisition by Frasers Group raises questions about the future of Studio Retail Group and its ability to recover from its financial setbacks. The administrators are now focusing on resolving the outstanding debts and determining how funds will be allocated to creditors. To secure a viable future, Studio Retail Group must reassess its supply chain strategies and effectively address its financial obligations.

Useful links:
Studio Retail Group Official Website
Frasers Group Official Website