(Alliance News) - Studio Retail Group PLC on Monday said its profit fell sharply in the first half of its current financial year amid higher costs and reduction in revenue.
In addition, the retail and education company said it has agreed to sell Findel Education Ltd to the Council of the City of Wakefield for GBP50 million on a debt and cash free basis.
The net cash proceeds will be used to make a voluntary payment to the company's defined benefit pension fund, it said, with the remainder used to reduce debt.
Following the disposal, Studio Retail said it will focus on its "high growth, value orientated" e-commerce business. Completion expected to occur in 2020, subject to receiving the necessary approvals and clearances.
"We believe this transaction is in the best interests of all Studio stakeholders, allowing us to focus on driving further growth within our core Studio value retail business," said Studio Retail Chief Executive Phil Maudsley.
Turning back to results, the company, which was previously known as Findel, reported pretax profit of GBP2.6 million for the 26-week period ended September 27 compared to GBP15.5 million a year earlier. Revenue, meanwhile, slipped by 1.3% to GBP132.1 million from GBP133.8 million.
Studio Retail explained that its trading costs grew by 21% to GBP82.5 million from GBP68.4 million year-on-year, while finance costs climbed by 15% to GBP5.3 million from GBP4.6 million.
Looking ahead, the company said it had record Black Friday sales with daily dispatches exceeding 100,000 parcels. Product sales in the last 11 weeks were up 10% on prior year, Studio Retail said.
"The retail marketplace is undoubtedly challenging, but Studio's unique position as a digital-first, value-focused retailer with an integrated credit option gives us great confidence for the future," said Maudsley.
Also on Monday, Studio Retail said it appointed Paul Kendrick - who joined the firm in May 2016 - as an executive director, with immediate effect. Kendrick will continue in his current role of managing director of Studio digital business.
"With the increased focus on Studio following the sale of Education, it is a natural and well-deserved step for Paul to join the group board," explained Maudsley.
Studio Retail shares were trading 5.5% higher in London on Monday morning at 233.00 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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