Weak Christmas for Quiz, but its own webstore sales grow
Recent results from Quiz Clothing have shown a once-high-flier struggling to generate sales growth and its Christmas trading statement on Wednesday showed more of the same.
But the company, which focuses on occasionwear and dressy daywear, said that at least its “proactive actions to manage margins and enhance cost efficiencies offset softer Christmas sales”.
The omnichannel brand said the seven-week period from November 24 to January 4 included a pleasing Black Friday event, but “since that date, sales have softened relative to expectations and, as a result, group revenue in the period decreased by 9.3%”.
That’s a big number overall and was all about weakness at physical stores and some third-party websites as the company said online sales through its own webstore rose. They “continued to deliver growth with revenues increasing by 5.9%, supported by improved full-price sell-through with less promotional activity than the prior year”.
The company had previously said that it had terminated unprofitable revenue streams through a number of third-party website partners in the past 12 months. But “as a result of these actions, as well as weaker sales through some of the group's remaining partners, revenues generated from third-party online partners declined significantly against the prior year”.
The end result of this was a total online sales fall of 14.8%. Now, it’s rare that any fashion retailer reports online sales falling at a greater rate that overall sales, but it will be interesting to see how the comparison numbers develop as the distorting effects of strategy changes in its third-party partnerships start to recede.
As previously indicated, during the firm's current financial year, its stores and concessions have seen lower footfall year-on-year and this trend continued during the seven-week period, resulting in revenue from its UK locations falling 7%.
But the company said gross margins were broadly in line with expectations, inventory “continues to be carefully managed with current levels lower than the previous year”, and the balance sheet remains strong with net cash of £10.7 million at January 4, compared to £12.3 million a year ago.
Given that the company has been heavily focused on saving money, boosting margins and being more efficient, it has “been able to largely offset the impact on profitability of the lower-than-anticipated sales in the period”. That means its overall performance in the year-to-date remains broadly in line with the board's expectations.
CEO Tarak Ramzan said that despite the clear problems during the festive season, “we were pleased that revenues through our own websites grew with less promotional activity than in the prior year, which underpins our confidence in the health of the brand”.
And he added that the company has “continued to make good progress in improving gross margins and reducing costs in line with the strategic priorities set out by the board last year. With our cash position, we remain confident that we can improve our financial performance and grow revenues. We have a clear customer focus and a flexible model that the board continues to believe will enable Quiz to adapt to the changing retail environment and return to profitable growth in the medium term”.
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