Quiz powers ahead online, store sales rise in tough times, but profits are hit
Listed fashion brand Quiz Clothing has lost some of its lustre in recent periods with its shares struggling to maintain their former lofty position on the back of concerns over current trading. And that made its interim results statement on Tuesday very much one to watch.
So did the company offer a more upbeat outlook? Yes and no. For the six months up to September 30, it said that it saw continued brand growth “despite challenging market conditions.”
And since the end of H1, it has continued to grow group sales. In the eight weeks to November 24 its sales, excluding wholesale, are up 10% year-on-year so far, underpinned by “particularly strong sales growth through the brand's own websites of 62%.”
But given that online accounts for 30% of its turnover at present, that strongly suggests that in-store trading is less buoyant, although investors seemed pleased and its shares rose over 3% as the markets opened.
So let's look at the numbers. The H1 figures weren't bad on some measures, even though underlying profits fell. Group revenue rose 19% to £66.7 million, profit on an EBITDA basis rose 11% to £5.6 million, and pre-tax profit was up 4% to £3.8 million. But underlying EBITDA fell 2% to £5.9 million and underlying pre-tax profit was down a hefty 11% to £4.2 million.
Those underlying figures exclude the £0.4 million bad debt provision arising from the House of Fraser administration.
Back with the good news, that 19% revenue rise was driven by continued growth across all channels. Online revenue rose 44% to £20 million with Quiz website sales storming ahead by 70% and website traffic increasing by 58% year-on-year, reflecting "effective marketing and improved conversion rates.”
International sales meanwhile were up 16% to £11.6 million. They include revenue from Quiz standalone stores and concessions in the Republic of Ireland, standalone stores in Spain and franchises.
It said that “awareness of the brand in target international markets continued to strengthen” and the “growth in revenues is evenly split between increased revenues from our franchise partners and increased revenue from our stores and concessions in the Republic of Ireland and Spain.”
But the UK is the brand’s core market and its stores there still make up most of its sales. Revenue from UK stores and concessions increased 9% to £35.1 million, “reflecting a particularly strong performance during the summer months and increased overall footfall in our stores across the period.” But September “was a challenging month as well as, the board believes, [for] the fashion market generally.”
The company said the challenges affecting the performance of some of its UK concession partners have been widely publicised, but its “concession model remains very flexible and attractive with limited capital expenditure required. Our most recent concessions which have been opened for more than a year have, on average, achieved the group's targeted payback period of 12 months or less.”
And overall, founder and CEO Tarak Ramzan said the company “has continued to deliver good revenue growth despite challenging external market conditions.” The brand continues to grow, and it has seen “good sales momentum in our core collections as well as across extended ranges including QuizCurve, Occasion and our newest range, QuizMan.”
Ramzan added: ”Quiz has a clear customer focus, a proven ‘test and repeat' model and a dedicated management team. With these strengths, and despite a challenging market environment, the board believes the group is well positioned to deliver long-term profitable growth.”
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