Studio Retail Share Discussion Threads

[1gw] 25/11/2021 10:12

Bad, but not quite that bad, I think, planit.

£37.5m mid-point guidance for full year adj PBT
£23.7m 1H adj PBT

£13.8m mid-point guidance for 2H adj PBT.

That's clearly a huge drop from 2H last year (which was £31.4m by my calcs) but not so much from 2H FY20 (£15.6m, although not like-for-like given Education and whatever reporting changes have been made since then).

They seem confident in the presentation and on the call that things will get better. Marketing costs already coming down (google price inflation getting a lot of air time), and some improvement recently in clothing sales. They will be able to pass on more of their increased costs over time and supply chain cost pressures should ease anyway as things normalise post-pandemic.

[planit2] 25/11/2021 09:44

Are we saying

in the current half (which accounts for 60% of annual sales) profits are predicted to be £10m (£36.5m - £26.5m)

down from £23.7m in the first half that contained 40% of sales?

That is a big drop.

[1gw] 25/11/2021 09:40

The CEO talking about "growing penetration of the app" on the call, so that sounds like continued growth there.

[1gw] 25/11/2021 09:15

Disagree skindle. The group should be doing its best to guide the market about current trading and outlook. There are clearly headwinds that are impacting current trading, which is why they have reduced their guidance for full year results.

The presentation and this morning's report go into quite a lot of detail about what is happening in the market and that is a good thing in my opinion. We had an exceptional period last year, and now we're transitioning back to a more normal environment.

Over time, this approach should build credibility, although this morning the shareprice is taking a bit of a battering due to the profit warning.

[skindle] 25/11/2021 09:01

Just in case anyone is assuming that the half year report is negative, these are the headlines

Adjusted PBT +36 per cent at £23.7m
PBT +67 per cent at £26.5m
Core net debt -53.98 per cent at £20.8m
Group revenue +3.2 per cent at £239.6m
Market cap now £162m.

Negative forecasting by the chief executive and the chief financial officer has successfully reduced the share price by 20 per cent. Well done gentlemen, despite stellar figures you have further destroyed value. Expect an offer from a group who knows how to create value.

[zho] 25/11/2021 08:42

>>Where did you get the App information from on the 1.5m users?>>

Apologies if I've got that wrong. My notes from Andy Brough's pitch in April read:

"4 years ago they had 1.5 million customers, now 2.5 million, of whom 1.5 million use their app."

[planit2] 25/11/2021 08:36

Where did you get the App information from on the 1.5m users?

In the April update it say this just after mentioning the App:
"with over 1.5m active credit account customers, up 15%"
But this is credit account customers

In the final results in June they say
"The introduction of the Studio App in late 2019 has been a significant contributor to the success of the business during FY21, with over 1 million customers downloading the App"

So the 1.2m seems a further increase.

The fact so many customers are using the app is good for the medium term, these customers are likely to keep buying and less price conscious.


The main problems are the ones affecting all retailers, margin compression and costs rising. The fact they mention staff costs is not good as these pressures will continue.
Could be a takeover target again after falling so far.

[skindle] 25/11/2021 08:30

The fundamentals are strong, it’s the management that seem intent on shooting themselves in the feet ! I don’t understand the theory of negative forecasting. Surely this will only lead to predatory interest.

[schroedar] 25/11/2021 08:18

I think this management’s credibility is now shot to pieces. Time for Ashley to put 220p on the table and finish it. They are out of defences and excuses

[zho] 25/11/2021 07:51

Yes, it's a profit warning.

On the basis of a quick look I thought the numbers looked decent and it's good to see core debt continuing to reduce so quickly. But FY guidance has been cut by around 15% and it looks as if the number of Studio App users has dropped from 1.5 million in March to 1.2 million now.

It's cheap, but is it cheap enough to arrest the recent fall in the share price? I don't think so, not with the MA/FRA overhang.

[purplepelmets] 25/11/2021 07:46

Sp makes no sense at all imo.should be about double even with the profit warning this morning

[1gw] 25/11/2021 07:43

Quiet on here! I guess that's a profit warning, although the 1H eps (continuing ops) is very impressive in relation to the shareprice.

[skindle] 24/11/2021 15:31

I now question the wisdom of my logic when I and the majority of shareholders voted against a takeover by Frasers (Sports Direct) back in April 2019 when their share price was under three pounds and ours was hovering around two. Our share price has now shot up to 233 pence (in thirty two months) while Frasers share price has only increased by a mere one hundred and thirty eight per cent to 700 pence. I think we may have called that decision incorrectly !!

[brummy_git] 18/11/2021 14:45

Studio Retail (starts 03:15) was talked about positively here by Jamie Constable of Singers.


www.youtube.com/watch?v=KknJ6I5U_5g&t=3s

[skindle] 18/11/2021 11:44

I thought that Mr Kendrick would be the new chief executive to take this company to the next level and finally realise the true value of the company. Unfortunately this has not proved to be the case. Communication with the stock market has been kept to the absolute minimum which has resulted in erosion of both company value and my investment. My hope now is that the half year results will help to push the share price closer to my break even and I will divest, never to invest again. This is an excellent company but is under performing because of poor management.

[zho] 03/11/2021 17:32

Ennismore 4.56% -> 5.00%

[planit2] 26/10/2021 08:42

It's difficult due to the supply chain, input costs for everyone are going up very fast, shipping is 4 times more expensive than it was and retailers are finding it hard to raise selling prices as fast as their costs.

This is expected to continue, Boo is trading at nearly 30% less than before its update a month ago. Against this STU is doing really well.
Hopefully this will be enough to raise the share price up towards the 270 level again but I doubt there will be a rerate soon. That would require a return to growth.

[skindle] 26/10/2021 08:24

Two points here - firstly why has it taken so long to issue a report that could have been released on the 1st October, I was really hoping they were holding back because they were working on a project that would significantly increase value. Secondly I don’t agree that they are trading in a difficult market. They have never had a larger number of registered and active digitally minded customers in a near zero interest rate economy. If they can’t make ends meet now then they may as well give up. I’m disappointed with the content of this luke warm statement.

[planit2] 26/10/2021 07:43

They haven't warned on margins which is good news. Perhaps they are expecting other companies to have shortages so prices will be kept up.

I read it as quietly confident in a difficult environment.

[texaspete2] 26/10/2021 07:34

Consensus is a fall in revenues this year but increase in net profit, so yes a mixed bag. Its all on Q3 then and by the sounds of it they have prepared well, shame no profit guidance

[purplepelmets] 26/10/2021 07:10

Mixed bag here. At least they finally issued a TU, could have been worse.

26 October 2021

Studio Retail Group plc

("SRG" or "Studio " or "the Group")

Trading Update

SRG, the digital value retailer, today gives an update on its trading for the first half of the financial year to 24th September 2021(1).

H1 product sales were marginally ahead of the exceptional performance seen in the prior year and up 38% over a 2-year period. Financial services revenue in H1 was 11% ahead of the prior year.

As has been well publicised, global shipping container availability and costs have been materially disrupted in recent months. The business took a conscious decision early in the summer to secure its supply chain for the crucial trading period leading up to Christmas, aided by Studio's in-house sourcing office based in Shanghai. This included use of our contracted container shipping plus additional charter ships, which gives more guaranteed stock availability. This means that overall Studio is in a strong stock position ahead of the peak with inventory levels approximately 10% ahead of last year. However, a small number of ranges have experienced delays which could impact availability late into the peak season.

The Group's core net debt ended September at approximately £20.6m (September 2020: £45.2m), with the strong H2 trading from last year and the proceeds from the sale of Education being offset by the growth in receivables and the extra investment in stock.

Studio typically delivers around 40% of its full-year product sales during the upcoming Q3 period that includes Black Friday and Christmas. Whilst the business is well positioned with a strong overall stock position, there are continuing headwinds in the wider market that make the outlook more uncertain than usual at this stage of the year.

We will provide a further update with our interims which we currently expect to announce at the end of November.

Notes:

(1) first 26-weeks in the financial year ending 25th March 2022

[jeff h] 20/10/2021 12:29

Thanks for that zho, Andy Brough always good to listen to, a very down to earth guy who talks common sense.

I note very.co.uk which operates in a similar market to studio seems to be doing well and considering an IPO:-



I also read that they have bought a couple of annuities to buy in the defined pension liabilities and now just have a single payment to make in a few months time to be free of any future contributions/liabilities of the defined benefit pension element of the pension schemes.

Studio have already mentioned they are looking to get rid of its defined pension liabilities so would be no surprise to here news about this in the not too distant future - it would save the company from making the annual £5m a year payments to the pension fund which would obviously be a massive benefit to the company.

[zho] 20/10/2021 09:31

Andy Brough mentions online retailers (STU, BWNG, QUIZ) in a Vox Markets interview. They have new management, they're operating in growth areas, they've sorted out PPI problems, they're helped by the rising pound, and yet they're on PERs of 5 or 6, but, as AB says, "what do I know?”.

That said, AB says he thought PTEC was a sitting duck 2.5 years ago and it took until yesterday for a takeover offer to arrive.

[skindle] 16/10/2021 09:30

Totally agree Jeff H. I am well in the red for my latest investment so I am hoping and holding. Did we reach the low point of the trough this week at 236 pence ? A slight climb back from this figure does suggest that.