Quiz has tough year, sales plummet in latest period
Struggling omnichannel channel fashion retailer Quiz released its preliminary results for the year to the end of March on Tuesday. And while that period included only a few weeks affected by the pandemic, the figures showed the company was already facing challenges before the current crisis.
And those challenges have only got bigger. The pandemic has “significantly impacted” its sales in the current financial year, with both its stores and its concessions shut for a number of months. This meant its total sales in the six months to the end of September plummeted 73% to £17.2 million.
But now back to the year on which it was reporting on Tuesday and first the numbers. Revenue fell from £130.9 million on an underlying basis to £118 million in the latest year. And gross profit fell from £79.4 million to £71.1 million.
A year ago, it made an underlying operating profit and pre-tax profit of £0.6 million and a reported operating profit of £0.2 million. But this time, its underlying operating loss and pre-tax loss came to £3.7 million and its reported operating loss was £28.7 million. That was because of ‘adjusting items’ linked to asset write-downs and bad debts from customers entering administration.
The company said the 10% drop in group revenue reflected “challenges during the year as well as a sharp decline in March sales further to Covid-19 disruption”.
It added that online revenue decreased 9% to £37.5 million, mainly due to lower sales via third-party websites. Sales volumes through the Quiz website “were consistent with the previous year but more profitable year-on-year”.
International sales dropped 5% to £21.8 million on the back of declining revenues from stores and concessions in the Republic of Ireland and the cessation of certain franchise sales.
More bad news came with revenue from UK stores and concessions falling 12% to £58.7 million and the group gross margin dipping to 60.3% from 60.7%, “reflecting increased provisions made against slow-moving stock”.
But while it's important to see what happened in its previous year, given the circumstances of the current financial year, it's also crucial to hear what's been going on since the year-end.
As mentioned earlier, sales plunged the first half. But the company has been working hard to ensure its future. It said it has agreed an extension of its existing £3.5 million banking facilities until October 2021 and its store restructuring undertaken post-year-end means “lower future rental costs and more flexible leases”. It has also exited the Spanish market.
Closer to home, it has so far reopened 60 of its shops in the UK and four in the Republic of Ireland and is in negotiations about another five.
The company, which is listed on the London Stock Exchange, has also taken note of scandals that have erupted around its retail peers such as Boohoo. It said it has “conducted a thorough review of its ethical auditing processes to ensure they are robust enough to ensure on-going compliance with the Group's Ethical Code of Practice throughout Quiz’s supply chain. The group has taken a number of actions to strengthen its procedures and ensure that its products are consistently supplied in line with” that Code of Practice”.
So how is it feeling about its prospects for the months ahead? Despite very challenging trading conditions during the current financial year to date, it has enough cash to continue and its store restructuring means its board believes it has “a more flexible and economically viable store portfolio moving forward with an average lease term of 24 months and a significantly lower cost base”.
CEO Tarak Ramzan said it’s also aiming to “rebalance our product offering towards more casual clothing to meet the changing lifestyles of our customers. We remain confident in the strength of our brand and believe that underlying customer demand remains strong for the brand's trademark occasionwear, which we aim to capitalise on when restrictions on social events are eased. [The brand] has strong customer appeal and the group's omnichannel business model remains relevant and key to our long-term success”.
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