More than 1,400 jobs have been saved at Studio Retail after it was acquired by Mike Ashley’s Frasers Group, with an upfront investment believed to be more than £100 million.
The company is one of the biggest online retailers in the UK selling clothing, footwear, homeware, and Christmas ranges.
But administrators were appointed on Wednesday to handle an imminent collapse of the parent company.
Mike Ashley’s Frasers Group have acquired Studio Retail and made investment of £100M
Amid customer concerns about orders and refunds, Frasers intervention means consumers will now receive their goods and any money that they are owed.
The East Lancashire company, which counted the Frasers Group as one of its largest shareholders, has suffered an alarming fall from grace after reporting more than half a billion in sales and £41.7million pre-tax profits, last year.
Despite initial success during the coronavirus pandemic fuelled by sales moving online, Studio Retail was hit by rising costs of shipping and late deliveries, as supply lines were disrupted around the world.
The business issued its second profit warning in two months at the start of February and a request for a short-term £25million working capital loan was turned down by its bank, HSBC.
The company formerly known as Findel stunned the City last week after suspending its shares
But today, there was relief for staff at the firm, which is based in Accrington, where it is one of the area’s largest employers. The Conservative MP for Hyndburn, Sara Britcliffe, spoke last week of the ‘concern and nervousness’ in Lancashire over the possible demise of the firm. She said she had ‘personally spoken’ to the former Newcastle United owner, Mike Ashley, and stressed the need to protect jobs and keep the company in the area.
The acquisition by Frasers Group was announced in the City this morning.
Studio Retail initially benefited from the pandemic with increased sales, but then struggled
Mike Ashley’s company formerly held a 28.9 per cent stake in Studio Retail Group PLC, which has gone into administration, but it has now acquired control of the subsidiary company, Studio Retail Limited.
The deal will see Frasers Group take on responsibility for the money owed to banks, the pension scheme and other liabilities, including paying suppliers.
The upfront investment required to keep the company running is believed to amount to more than £100M.
As well as rising costs, supply chain problems have meant the company has been stuck with a large amount of seasonal stock, which it cannot sell until next year. Meanwhile, it is thought more than £10 million is owed to HMRC and at least £50M to suppliers.
Ashley’s intervention has saved 1,500 jobs in Accrington and allayed fears of shoppers
Studio Retail began life as a catalogue retailer selling gifts, but it expanded online and now sells a wide range of products on flexible payment terms.
It has around 2.5 million customers and made £578.6m in sales during the last financial year.
The company is seen as a good fit for Frasers Group, which could seek to develop the payment options offer on their digital platforms .
