Retail tycoon Mike Ashley has bought out ailing online retailer Studio Retail Group after it went into administration.
The former Newcastle United owner’s Frasers Group had been the biggest financial backer of the business, and had even tried to buy it in 2019.
Studio, which sells fashion, home and electrical products went bust on Valentine’s Day after supply chain issues.
But why did this happen - and what does the takeover mean for consumers?
Here’s what you need to know.
What is Studio Retail Group?
Studio Retail Group is a value online department store-style business based in Accrington, Lancashire
It sells leisurewear, electrical and household items, bedding, furniture, nursery products, gifts and greeting cards through two websites: studio.co.uk and ace.co.uk on flexible payment terms.
Around 2.5 million people are regular customers of the business which was known as Findel until 2019.
Studio employs around 1,000 staff.
It remains unclear what the Frasers Group takeover means for Studio’s workers, although Conservative MP for Hyndburn Sara Britcliffe said it would mean their jobs were protected.
“I am relieved that these jobs have been saved and now we need to ensure they stay in Hyndburn long-term and the company goes from strength to strength,” she said in a post on social media.
Why did Studio go into administration?
Studio Retail Group’s problems were caused by issues with its supply chain.
Transport delays and rising shipping costs hampered its business model, with the company reporting it had distorted stock levels as a result.
The first signs of trouble came when the firm was forced to issue two profit warnings in two months as a result of the problems.
Then, on 4 February, a warning appeared on its websites saying that returns and failed deliveries were taking longer to be processed due to logistics delays.
On Monday (14 February) Studio revealed it had asked its banks for a short-term loan of £25m to keep it operational while it sold off excess stock to customers.
However, this request was refused and the business was forced to call in administrators.
It marked a major reversal for Studio, which only last year had seen sales climb 33% (£143.7m) to £578.6m and pre-tax profits rocket 513% to £41.7m in the year to 26 March 2021.
The company had even almost halved its core net debt - reducing it by £24.3m to £27.6m.
While some aspects of the business kept running and staff continued to be paid, shoppers were unable to make new purchases from the site until Mike Ashley’s takeover was announced on Friday (25 February).
Soon after the deal became public, the Studio and Ace websites announced: “We’re OPEN again. Take a look around and buy with CONFIDENCE.”
Studio’s shares have not yet resumed trading on the London stock exchange.
What did Mike Ashley pay for Studio?
Mike Ashley’s Frasers Group is reported to have bought the business for £26.8m.
It means Studio joins a stable of well-known brands that includes Sports Direct, Jack Wills and Game.
Before the firm went into administration, Frasers Group was its biggest single shareholder with a stake of around 29% in the firm.
Mike Ashley had aimed to lead a takeover of Studio in 2019, but had his 161p-per-share offer rebuffed.
Mr Ashley previously bought retailer House of Fraser when it fell into administration in 2018.
A message from the editor:
Thank you for reading. NationalWorld is a new national news brand, produced by a team of journalists, editors, video producers and designers who live and work across the UK. Find out more about who’s who in the team, and our editorial values. We want to start a community among our readers, so please follow us on Facebook, Twitter and Instagram, and keep the conversation going. You can also sign up to our email newsletters and get a curated selection of our best reads to your inbox every day.