Quiz talks on rents make progress, but sales have plummeted
Under-pressure fashion retailer Quiz Clothing mixed good news with bad on Wednesday and said that it has “made progress with renegotiating the lease arrangements with its landlords for its standalone Quiz stores”.
It announced a restructuring back in June for its then-75 standalones and said it has now reopened 48 of these, with expectations of around 60 eventually operating in the UK.
Rental terms for the reopened stores are “consistent with” the deals targeted by the firm and “provide a flexible cost base going forward with rents payable predominantly based upon revenues generated rather than previous higher fixed rental arrangements”. The average lease length on these stores is 24 months.
The company had already closed its seven stores in the Republic of Ireland and three in Spain. But it has now reopened four Irish stores and is in talks on another two, although its Spanish locations won’t reopen.
But the big question is, how has trading been going at the stores and on its website?
Its stores and concessions were shut for several months from late March and its online ops were also suspend for a fortnight in April.
And while the company shifted its product mix from its usual ‘going-out’ looks to more casual clothing, its sales from April to August fell a huge 77% to just £12.8 million. Physical locations in the UK fell as much as 89% to just £2.9 million, while even online sales saw a plunge of 54% to £8 million. That included a 45% drop via its own webstores and a 64% plunge through third-party websites.
“Given the lower demand experienced in the period, a higher level of discounting has been applied with gross margins generated being approximately 6% lower than the previous year,” it said. But it’s “not anticipated that this level of discounting will continue for the remainder of the year”.
As of this week, the company had just £6.1 million in cash available plus £3.5 million of bank facilities that are currently scheduled to expire on 31 October and that the group intends to renew.
Will this be enough to see it through? That’s unclear in the long term. Trading is certainly improving with the huge drop in e-sales, for instance, having turned into just an 11% decline in August.
Physical store sales are improving too, both through those 48 own-stores currently trading and the 141 UK concessions that have reopened out of its original 164.
But the company didn’t give any percentages here and while it said it’s “encouraged by the consistent improvement in like-for-like sales in recent weeks,” physical store sales “remain below levels generated in the previous year”.
International sales are also climbing compared to their lockdown lows, but again, no figures were given. And the firm also faces issues in the US. Following the bankruptcy of its biggest customer there, “the group is actively pursuing new opportunities in the US market”.
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