Studio Retail Group PLC (LSE:STU), formerly Findel, is set to call in administrators following a failed attempt to obtain a short-term loan from its lender.
The online trader, whose largest shareholder is Mike Ashley's Frasers Group, issued a trading statement at the end of January where it slashed profit guidance to between £28mln and £30mln, down on market expectations of £35mln.
That sent the share price tumbling more than 35%, forcing the company to request a short-term loan from its bank, HSBC, to fund stockholding which it “believed was sufficient to enable it to sell through to customers,” the statement said.
The company was unable to reach an agreement with the bank, forcing it to file a notice of intention to appoint administrators to Studio Retail Group and its subsidiary Studio Retail Limited.
Its shares have also been suspended.
Headquartered in Accrington, the company said early-year demand had been subdued, but it was able to clear some seasonal stock.
Ashley’s Fraser Group owns a 29% stake in the company, making it the largest shareholder.
The tycoon and former Newcastle United owner had attempted a takeover in 2019 at 161p per share, but the offer was rejected.
On Ashley, analyst Danni Hewson at AJ Bell said, “his tactic has often been to wait until a retailer goes into administration before pouncing with a cut-price deal. He’s a shrewd operator and would rather wait until a company is on its final breath before coming in with a lifesaving offer.”
Shares were trading at 115p before the suspension.