Tough times for Quiz as trading proves weak in summer months
Quiz’s trading update on Tuesday showed the occasionwear-focused fashion brand continuing to face the major headwinds in Q1 that it was battling in its last financial year.
The company had talked of the challenges it was up against in the year to the end of March when it released its results in July. And on Tuesday, its update on the quarter to the end of August said inflationary cost pressures have continued to impact consumer confidence and demands for its products.
As a result, overall revenues in the year to date have continued to be lower than the previous year and below management's prior expectations.
In fact, total revenues fell a substantial 15.3% to £37 million. That divided into an 11.5% fall to £19.3 million in UK stores and concessions, a 10.5% fall to £6.8 million in international operations, and an even bigger 23.8% fall to £10.9 million online.
The almost 12% drop in the group's UK stores and concessions “reflects the decline in traffic in-store relative to the previous year”. But during September, total UK stores and concessions revenues have been “similar to” the prior year.
It's unclear exactly how the cost of living crisis impacted the company. Its products are relatively low priced, but given that they're focused on dressing up, it could be that its core customers have been reining in their spending on days and nights out or on holidays and therefore had less need to buy new clothes for such events. The bad weather may also have impacted spend on summer clothing.
As of 19 September, it operated 64 stores in the UK, up from 62 a year ago as since 1 April, three new stores have opened, three have relocated, and one has closed. It also operates 61 UK concessions, down from 62 a year earlier with the firm saying they “continue to provide Quiz with a flexible and low-cost route to market given the limited expenditure required to establish new outlets”.
International revenues are focused on directly-operated Irish stores and concessions that fell to £2.4 million from £3 million this time, as well as revenues from international franchise partners that dipped to £4.4 million from £4.6 million. As of 19 September, it operated five stores and 21 international concessions in Ireland, down from six stores, but up from 17 concessions.
As for its online operations, sales to its own websites dropped to £7.4 million from £10 million and sales through third-party websites were down to £3.5 million from £4.3 million. The company explained that “progress was made in the period increasing the Average Transaction Value, however the decline in web traffic and an increase in return rates year on year adversely impacted revenues generated”.
Quiz also said that while it’s “too early to determine with certainty, the board has taken the prudent assumption that should the current trend in revenues continue during the second half of the financial year”, FY24 group revenue would be 6%-7% lower than current market expectations of £91.7 million. This will have a knock-on impact on its profitability and while it expects positive EBITDA, it could make a loss before tax for the year of no more than £1.5 million. In the previous year, EBITDA was £6.2 million and the profit before tax was £2.3 million.
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