Studio Retail says it acted early to secure stock for the peak trading period in the run up to Christmas, and is now well supplied. But it says it could still run short of some product lines towards the end of the season, and its forecasts are more uncertain than usual given the wider trading environment.
The retailer, whose Studio brand is ranked Top350 in RXUK Top500 research, says it took a conscious decision early in the summer in the light of the well-publicised disruption to global shipping container availability and costs to ensure it had the goods that it will need. Its in-house sourcing office in Shanghai helped to secure supplies, while the retailer chartered extra ships on top of its contracted container shipping.
Now its inventory levels now stand around 10% higher than a year earlier, although, it says, a small number of ranges have been delayed, and this could affect availability late into the peak trading season.
The update came as Studio Retail gave a half-year update on trading. It said that first half product sales were “marginally ahead of the exceptional performance seen in prior year”. Sales were 38% ahead of the same time two years ago, in pre-pandemic 2019. At the same time, revenue from financial services were 11% ahead of last year in the 26 weeks to September 24 2021. Studio Retail sold its Findel Education division for £30m earlier this year, but says the income from this has been offset by the extra investment it has now made in stock and by rising costs. At the end of the half-year it had net debt of about £20.6m.
About 40% of Studio’s annual retail sales usually take place in the Black Friday and Christmas third quarter of its financial year. The retailer says: “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 time of the year.”
