Updated: Frasers buys Studio Retail out of administration

Studio, which fell into administration earlier this month and had reportedly appointed Teneo as administrators yesterday, has been acquired out of administration by its largest stakeholder Frasers Group.

Frasers Group will pay Studio Retail lenders £26.8m for the transaction and has agreed to act as guarantor on payments of Studio Retail’s pension scheme.

Frasers said the acquisition of Studio would provide it “with expertise and synergies that will accelerate” its ambition to offer a “flexible repayment proposition” to its customers.

Retail Week understands Ashley, who was the biggest single investor in Studio at the time of its collapse with a 29% stake, has been compelled to acquire Studio Retail primarily due to Studio Pay – a product that offers customers personal credit accounts to spread the cost of their purchases.

A source close to the situation said the acquisition would not only help Ashley claw back his investment in the business – worth as much as £30m – but allow him to offer credit services to online customers of Frasers’ existing retail brands, including Flannels, Jack Wills and Sofa.com.

Studio declined to comment on how many customers currently use Studio Pay or how big its loan book is. However, one source suggested it would be large enough for Ashley to recoup the majority of the funds he lost as a result of Studio’s demise. 

Studio Pay is already approved by the Financial Conduct Authority, which means Frasers could start offering credit to its customers almost immediately, rather than creating a new finance product that would need to be scrutinised by the watchdog. 

Facilities such as credit and buy now, pay later services, which allow shoppers to spread costs, are likely to become even more popular as the cost of living increases – a factor that will be playing a part in Ashley’s strategic thinking.  

Studio, which had warned on profits twice during the previous two months, failed to secure the £25m loan it required after supply chain snarl-ups led to a build-up of out-of-season stock.

• Never miss a story – sign up to Retail Week’s breaking news alerts