Lockdown is bad news for party-focused Quiz, seeks to renew credit facilities
Fast fashion retailer quiz said on Thursday that its performance so far this year had been in line with expectations before the Covid-19 outbreak but that it has seen "a substantial reduction” since then.
The company has been under huge pressure from faltering sales in recent periods and has seen its share price plunging as a result, so the coronavirus outbreak is doubly bad news for the business. The retailer is at higher risk in a lockdown scenario given that its offer is very much focused on occasion dressing. That means clothes for parties, evenings out, and other special occasions like weddings. None of these things are happening at the moment.
It said that since the beginning of March, the substantial reduction has resulted in lower traffic both to its physical shops (which of course, are now closed anyway) and also to its webstore.
The company decided to close its shops on March 22, ahead of the compulsory lockdown that was ordered by prime minister Boris Johnson.
Given the current issues, the company said that revenues and margins this month are expected to be "materially below the board’s expectations". Of course, that situation could continue beyond this month, but March is particularly important as the company’s financial year ends on March 31.
Quiz said that the financial year will also be impacted by factors such as determining the recoverability of debtor balances, the adequacy of inventory provisions and the requirement for further non-cash store fixture and lease provisions.
With all that in mind, it's no surprise that the company isn't providing any guidance for the following financial year.
It did say that it had net cash of £8.3 million as of March 24, as well as a £2 million overdraft facility and a £2 million working capital facility. While these are scheduled to expire on April 23, the company is currently seeking their renewal.
At the moment, it’s continuing to take steps to preserve cash by eliminating non-essential spend, postponing capital projects, substantially reducing stock intakes and deferring payments wherever possible.
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