STU.L Share News (STU)

(Sharecast News) - Home shopping company Studio Retail - formerly Findel - reported a surge in sales over the lockdown period, as the Competition and Markets Authority announced it will refer the proposed sale of Findel Education to a phase 2 review.
Studio said sales in the first 11 weeks of the new financial year rose 55% compared to the same period a year ago amid "particularly strong" demand for ranges such as toys, games, electricals, fitness and garden.

The company noted increased numbers of new customers, alongside good levels of repeat shopping from its established base.

"We have reduced the level of marketing spend, whilst focusing the majority of our marketing activity since lockdown on digital and TV channels, which has proved effective, with traffic to the Studio website and new app being well ahead of prior year," it said.

Studio said customer repayments have remained strong, with requests for forbearance caused by the pandemic representing less than 4% of the total receivables balances. However, it cautioned that this and the level of customer arrears could worsen later in the year if unemployment levels increase materially.

"We have recently agreed in principle minor, short-term variations to the securitisation agreement to help mitigate these Covid-19-related impacts," it said.

As far as the education segment is concerned, Studio said demand for educational resources remains much lower than it would normally be at this time of year due to school closures. However, the situation has improved in recent weeks as some schools begin to reopen, with sales in June being around half the level of 2019.

"It remains too early to assess how and when the traditional trading peak in this market will occur in 2020 and the extent to which schools will defer certain types of purchasing until 2021," it said, adding that it will keep the level of overheads in the business under close review after the competition watchdog decided to refer the sale of the business to an in-depth investigation.

Studio agreed late last year to sell Findel Education to public sector buying organisation YPO for £50m.

Commenting on the CMA's decision, Studio said it still believes the deal will "greatly benefit the customers of both parties, better position the combined business to more effectively compete in the increasingly dynamic and competitive educational resources market, and encourage further digital innovation".

Chief executive officer Phil Maudsley said: "The overall market does remain volatile, and we are cautious about the risks to customer incomes for the remainder of the year. However, we have positioned ourselves strongly to manage these risks, and longer-term, we are well-positioned to respond to any permanent shifts in online consumer behaviour."

At 1310 BST, the shares were up 16% at 211p.