Quiz sales dive again as occasionwear demand drops
Quiz reported its interim results on Tuesday and while the company had already been struggling for some time, it's clear that it faced even bigger challenges in the period up to the end of September. And those challenges have continued since then.
That's no surprise, of course, as that half-year period took in the bulk of the first lockdown and the months when the UK gradually opened up again. But the fall in its turnover was huge. The company said that group revenue fell 73% to £17.2 million in the period from £63.3 million a year earlier. And the gross margin declined to 51.7% from 61.7%. UK stores and concessions fell 85% to £4.7 million, online fell 50% to £9.9 million and international dropped 78% to £2.7 million.
In the three months to the end of December, sales through UK stores and concessions have also fallen 69% to £5.8 million, online is down 45% to £6.6 million and international is down 53% to £2.8 million. That adds up to a total fall of 59%.
That said, cost reductions and measures to preserve cash helped offset the impact, but underlying EBITDA fell to a loss of £3.4 million from a profit of £6.3 million in the previous year. And the company made an underlying pre-tax loss of £5.6 million, which was wider than the £0.3 million loss of the earlier period.
These underlying figures were different from the reported results, which actually showed the company being profitable in the latest period. But that was because of one-offs — a non-recurring £16.2 million gain and a non-recurring £7 million charge — so the underlying results give a better picture of just how the company is actually performing.
Quiz said that its 73% decline in group revenue was due to the significant impact of the pandemic with stores and concessions closed for a number of months.
Concessions were actually a big issue and will continue to be a problem. After all, it has been operating 85 in Debenhams stores and 29 in Arcadia’s Outfit stores, and with both chains shutting down, that’s an important outlet channel closed off.
Unfortunately, online wasn’t the boon it has been to many other companies as Quiz said its online sales fell 50%. This reflected strong sales of occasionwear in the prior year, much lower demand for that category this time, and a 57% decline in sales through Quiz’s third-party website partners.
But it used the period to make some improvements in its overall operations and said that its store restructuring drive means lower rental costs and more flexible leases. Its store estate in the UK and Republic of Ireland added up to 59 shops by the end of the period with five more having opened since then in the UK.
As we’ve seen, also since the end of the period, revenues have continued to be impacted. They’ve been hit by lower demand due to continued social restrictions and stores and concessions being subject to closure.
But it saw a stronger sales performance in December relative to other months when all of its sales channels were operating. And it added that it has enough cash to continue.
Founder and CEO Tarak Ramzan said the company is rebalancing its product offer towards “more casual clothing reflecting near-term customer demand, [but] given our focus on occasionwear, demand for our products has been impacted significantly. However, we remain confident in the strength of our brand and are highly confident that demand for the brand's trademark occasionwear will recover when restrictions on social events are eased”.
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