Studio Retail hits sweet spot as uncertainty boosts FY20 revenue
Shares in online value retailer Studio Retail rose in early morning trading on Monday as the value-focused company announced a healthy set of results for the year ended March.
Total group revenue increased by 2.2% to £514.8 million, while revenue from the company’s core Studio brand grew 3.3% to £434.9 million.
Studio.co.uk, which has recently relaunched with an updated logo, performed particularly well in the period leading up to Christmas, with a more inconsistent performance during the quieter rest of the year.
And while sales were strong, competitive market conditions and a disappointing Q4 performance resulted in product margins reducing slightly to 33%.
Achieving more consistent results will be a key priority for the company going forward now that it has disposed of its Education division. Sold for £50 million in December, the transaction means that Studio will be the group’s main focus from now on.
CEO Phil Maudsley said that despite wider economic uncertainty, the company is in a “digital sweet spot”.
Adjusted pre-tax profit on a like-for-like basis from the total group - the measure of profit most closely monitored by management during the year - increased by 8.6% to £31.2m. Meanwhile, core net debt reduced by £5.6 million to £51.8 million.
Commenting on the results, Maudsley said: “The year FY20 seems a world away now, but it was a year in which we made operational progress as a group, ensuring we were ready to face Covid-19 from a position of strength.
“As the public have remained at home, more and more customers have been attracted to, and become aware of, our phenomenal online value offer. It is now up to us to keep up the momentum and make sure our proposition continues to resonate at a time when shopping habits are moving online and consumers are valuing the pound in their pocket more than ever before.”
Indeed, Studio enjoyed an “exceptional” trading performance in the first 20 weeks of the new financial year, with product sales up 42% on the prior year. Revenue from the brand’s financial services rose 6.4%
The business said it expects more competitive market conditions to return in the coming months, but it's on track to reaching its goal of having over 3 million active customers.
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