Quiz continues to struggle, UK and Ireland weak but Spain is stronger
today Oct 11, 2019
Quiz Clothing continues to face difficult trading as the UK retail sector stays challenging at best. And while the firm’s Spanish ops are doing well, its Irish business seems to be suffering from the same issues as it’s facing in the UK.
The omnichannel fashion brand said Friday that the six months to September 30 saw group revenue falling 5% to £63.3 million, although the gross margin is expected to be in line with expectations at 61%.
There was some good news in its report as online revenues grew 7% to £20 million “once adjusted for unprofitable revenue streams terminated during the year”. This means that online now accounts for close to a third of total turnover, although its growth rate appears to be slowing.
Broken down by online channel, Quiz said that growth through its own websites continued to be “solid” with sales up 12% year-on-year, which “reflects continued investment in the group's online proposition and product range, as well as effective marketing.” But while it didn’t say as much, the overall 7% online increase must mean that third-party websites have been less buoyant.
That’s perhaps no surprise. The problems in UK retail, especially fashion retail, have been widely reported and online is feeling the effects almost as much as physical stores.
On the subject of its stores, Quiz said that they’ve “experienced a reduction in footfall during the period against the prior year, resulting in weaker than initially anticipated sales.”
Sales in the group's UK standalones and concessions fell 11% to £31.3 million in H1, and while “the rate of decline experienced has reduced in recent weeks,” the firm’s footfall is still heading downwards.
The company said it continues to focus on improving the performance of its physical retail stores and “continues to believe in their importance to our omnichannel model and we are actively managing our stores and concessions to ensure their profitability.”
In one respect, it has an advantage in that the average lease length on its stores remains relatively low at 26 months and it continues to “appraise the economics of each store as leases come up for renewal.”
Internationally, its sales comprise stores and concessions in the Republic of Ireland and Spain, as well as franchise operations in a number of countries and parts of this operation seem to be doing better. International sales increased 3% to £12 million, reflecting growth in revenue from the franchise operations and Spanish stores. But this growth was partially offset by a decline in Irish stores and concessions “consistent with the pattern experienced in the UK.”
CEO Tarak Ramzan said: "Overall, the group's trading performance in the first half has been broadly in line with the board's expectations despite the difficult UK trading environment. Sales growth through Quiz websites has continued, reflecting the investment in our product range and marketing initiatives. Whilst trading conditions are expected to remain challenging in the near term, the board remains confident that underpinned by Quiz’s flexible business model and an increasing online focus, the group can return to sustainable profitable growth in the medium term.”
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