Quiz has good H1, Xmas trading starts well but could still be derailed
Struggling fashion retailer Quiz reported its half-year results on Wednesday and said that it saw increased demand as life got almost back to normal, with revenue growing, plus a return to profitability on an EBITDA basis.
It's good news for the company that has faced several challenging years, not only because of the pandemic, although the global health crisis did deal it a major blow as the going-out clothing in which it specialises saw plummeting demand.
And trading since the second half started in October has been good too. The firm said revenues in the two months to 30 November 2021 were up 108% on the prior year “and consistent with levels generated prior to the Covid-19 disruption on [a] like-for-like basis”.
But there’s still “potential for sales in [the] key trading month of December to be impacted if concerns over the Omicron variant suppress demand”, it said. Only this week a new Mintel study showed many Britons are nervous about socialising in the wake of the new variant’s fast growth so that warning is understandable.
Looking back at the first half, Quiz said that for the six months to the end of September, revenue rose to £36 million from £17.2 million a year ago and profit on an underlying EBITDA basis was £0.7 million after a loss of £3.3 million in the previous year. However, the company remained loss-making on an underlying pre-tax basis with a loss of £1.3 million, although this was better than the £5.6 million deficit it reported this time last year.
The 109% increase in group revenue came as the removal of social restrictions boosted demand and the company’s concessions and directly operated stores were open for more days during the period.
The company also said it saw a higher level of full-price sales and reduced discounting, which resulted in the gross margin increasing to 57.5% from 51.7% in the previous H1.
Despite stores reopening shortly after the half began, it enjoyed strong online growth too with a 43% increase in sales through its own website and a 27% uplift in total online sales.
Meanwhile, active customers rose 30% on the prior financial year and the benefit of the store restructuring undertaken in the previous year was “reflected in [a] positive contribution from stores”.
The company had 61 stores in the UK and five in the Republic of Ireland by the end of the half, with two more UK openings subsequently.
And it also saw a recovery in international revenues with a 160% increase period-on-period.
At the end of half, Quiz had a total liquidity headroom of £6.6 million, which included cash net of borrowings of £4.2 million and £2.2 million of unused bank facilities.
Founder and CEO Tarak Ramzan said: "Quiz has delivered an encouraging set of results. The positive steps taken over the last 18 months with regards to restructuring our business, tight cost control and inventory management have all proved beneficial. Whilst there continues to be uncertainty in the short-term we remain confident in the strength of our brand and are highly confident that the clear demand for Quiz’s trademark occasionwear will support continued profitable growth.”
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