Studio Retail warns on FY profits, shares tumble
Studio Retail posted a rise in interim profit and revenue on Thursday but warned on full-year profits as it highlighted "challenging" conditions in the third quarter.
In the 26 weeks to 24 September, group revenue rose 3.2% to £239.6m, while pre-tax profit jumped 67% to £26.5m. Adjusted pre-tax profit was 36% higher at £23.7m.
However, for the full year, the digital value retailer downgraded its pre-tax profit expectations to between £35m and £40m from previous guidance of £42m to £45m.
Studio - formerly Findel - said that trading from the middle of August was more challenging for online retailers, due in part to the full reopening of the high street and the further easing of lockdown restrictions.
The company noted that it typically delivers around 40% of its full-year product sales during the third quarter, which includes Black Friday and Christmas.
"Our core seasonal ranges have sold well throughout peak and although sales of certain ranges, notably ladies clothing, have been slower than expected, they have recovered well in the last two weeks," it said. "Our impression is that customers are shopping more selectively this year given inflationary pressures and the recovery from the pandemic. The supply chain challenges have added cost and gross margin pressure that has only partially been mitigated through pricing.
"We have also recruited fewer new customers due to marketing media inflation, lower availability hindering conversion, plus changes previously described to our financial services strategy that have had more of a short-term impact than anticipated."
At 0808 GMT, the shares were down 18% at 190.31p.