The digital value retail business reported a stellar increase in revenues as consumers headed online in their droves during the pandemic.
The company’s pre-tax profit for the year to March 26, 2021 stood at £48.8m, up 513% from £6.8m, while EBITDA grew 49% to 72.7m, driven by sales of home and leisure products, according to chief executive Paul Kendrick.
Sales on the site rose by a third to £578.6m following the completion of the company’s digital transformation, moving from a traditional catalogue retailer to a purely online player.
Product sales rose by 43%, attributed to the general trend towards ecommerce as high street stores remained closed. The retailers’ integrated financial services revenue also rose by 8.2% in the same period.
Kendrick noted that demand over the last quarter has also increased for electricals and garden categories as consumers spent more time at home during periods of lockdown.
“In the last three months, we’ve seen a similar trend. Our biggest volume line has been floor tiles. Clearly, this home improvement piece is still going on. In terms of value, it’s our outdoor inflatable hot tub that is still doing really well for us.”
However, the chief executive Kendrick also noted that the current supply chain disruptors being felt across the country were also impacting Studio, noting “it’s the thorn in every retailer’s life at the moment”.
“We’ve got a new shipping provider that we use that we moved to last year. That’s given us complete visibility of our supply chain right through end-to-end,” he added.
During the period, the online retailer also expanded its customer base by 35% during the pandemic to 2.5 million active customers, with 1.5 million of those holding a credit account with Studio.
Work to do to increase Studio’s brand awareness
According to Studio, this active customer figure is estimated to be less than a quarter of the company’s target market. Kendrick said: “The number one reason people don’t shop with us is that they still haven’t heard of Studio. Brand awareness is still relatively low.”
He does note that the retailer is approaching its busiest time in terms of product arrivals: “For us, big delivery months in terms of stock are July and August, getting ready for peak season. At the moment, we are able to get hold of the availability that we are looking for.”
“There is a cost attached to getting hold of that stock. That’s going to be one of the drags on the gross margin this year. We are managing to get what we need although it’s a daily battle as I’m sure most retailers are finding out at the moment.”
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