Ashley set to lose £30m as Studio teeters on the brink

MIKE Ashley suffered a £30m setback yesterday as a discount retailer he backed teetered on the brink of collapse.

Studio Retail Group suspended its shares on the London Stock Exchange and filed to appoint administrators after talks to find £25m fell through.

It had asked banks for the short-term loan to help it sell surplus stock, but said it was unable to come to an agreement so will not be able to cover its operating costs.

Studio, which was formerly known as Findel, sells clothing, homeware, toys and gifts to about 2.5m customers.

It offers flexible payment terms and is predominantly used by lower income families.

Annual sales hit £578.6m in the year to March 26, while profit was £41.7m. The administration puts up to 1,400 jobs at risk in its Accrington warehouses and head office.

Ashley is Studio’s biggest backer, having amassed a 28.9pc stake through his Frasers Group since 2015. He attempted a fullblown takeover, at 161p per share, in 2019 but was rejected. Shares topped 300p last May but have since crashed and were suspended at 115p yesterday.

If his stake is wiped out, Ashley would lose around £30m.

It is not known what Frasers Group will do once administrators have been appointed, or whether it will seek to buy the group out of administration.

But AJ Bell financial analyst Danni Hewson said: ‘Ashley’s 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 life-saving offer.’

The collapse of Debenhams in 2019 rendered Ashley’s 30pc holding, once valued at as much as £150m, worthless.

And that year when Goals Soccer Centres football pitch operator was kicked off the AIM junior stock market over an accounting scandal, his 19pc stake was wiped out.