Online shopping

Online shopping hit by cost of living crisis as Studio Retail appoints administrators

The rapid demise of Studio Retail, in which Mike Ashley held a 28.9% stake, confirms that even the online retail boom is not free from spiraling costs.

Earlier this month, Studio Retail issued its second earnings warning in two months following a slowdown in sales leading to a shortfall in working capital. The appointment of directors may come as a surprise to a business which made more than £500m in sales last year selling personalized gifts, clothing and homewares, and was valued at £100m before the suspension of shares. It is understood the business was suffering from spiraling costs – citing rising transport costs, rising wages and over-ordering of stock as particular issues causing cash flow difficulties.

With the company’s revolving credit facility fully drawn down, it requested an additional £25 million in the form of a working capital loan from HSBC. This request having been refused, the company took the decision to appoint directors.

As inflation takes hold and squeezes household incomes, this could be the first of many casualties for retailers riding the wave of the online retail boom. For retailers still struggling to recover from high street losses during the pandemic, in addition to steep cost increases, it will be interesting to see which businesses are still struggling to survive.

a slowdown in sales meant he didn’t have enough cash to pay the bills from a sharp increase in transport costs, higher wages and inventory delays due to supply chain issues.

https://www.thetimes.co.uk/article/studio-retails-d