Studio Group warns of profit hit amid ‘shipping issues’

Studio Retail Group has revealed its adjusted profit before tax for the full year is set to be lower than expected, after incurring further costs linked to shipping delays and port congestion.

According to the retailer’s Q3 trading period for the 13 weeks to 24 December 2021, it now expects profits of between £28m and £30m – down from the previously estimated £35m.

It revealed in the remaining five weeks of the quarter, which included Black Friday, product sales were 9% ahead of the prior year bringing the performance for Q3 as a whole to 10% below the “exceptionally strong performance” seen during the second national lockdown period last year and, cumulatively for the first 39 weeks, down by 5%.

However, the retailer said comparatives with last year are “distorted” due high street lockdowns consequent to Covid-19. It added a more appropriate comparison would be against the performance two years ago. On this basis, Q3 product sales were up 18%, bringing the total growth against FY20 for the first 39 weeks of the year to +28%.

It also revealed demand in the early weeks of January has been “relatively subdued”, with some margin erosion as it cleared some seasonal stock that could not be carried forward. This has led to a higher level of inventory than normal at this time of the year.

Studio said it expects to revert to more normal trading conditions in Q4 this year, assuming no further lockdown restrictions. It will take a more “cautious” approach to growth in the coming months to bolster its capabilities and resources for later in 2022.

Paul Kendrick, Group CEO, said: “The fundamentals of Studio’s business model are solid, notwithstanding the market challenges that have been exacerbated by our over-commitment to stock in the near term.

“The trading performance over Christmas, with sales up 18% over two years, shows our offer is resonating with a customer base of 2.3m. We will continue to drive the long-term profitability and success of the group.”