Studio Retail Group has stated its intention to appoint administrators after it failed to secure a £25m loan.
Earlier in February, the online retailer issued a profit warning – its second in two months.
It stated that profits would be lower than market expectations due to supply chain challenges and transport delays, adding that demand in January had been “relatively subdued with some margin erosion as we cleared some seasonal stock that could not be carried forward”.
Supply chain issues also led to increased levels of stock. Studio stated that the stock surplus had led to “a working capital funding requirement”, while it had also planned to increase prices.
Shares in the online retailer fell more than 35% after the announcement.
Studio had requested a short-term £25m loan from its banks to fund the surplus stockholding but was unable to reach an agreement to guarantee this additional funding. It now plans to appoint administrators as soon as possible.
Studio currently has about 2.3 million customers and sells clothing, homeware and electrics with flexible payment options.
The company, which counts Mike Ashley’s Frasers Group as its biggest investor, said that it would suspend trading of its shares on London’s stock exchange while it appoints administrators.
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