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Scottish fashion retailer warns of sliding sales as cost-of-living bites

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However, sales since then have plunged with the value of goods shifted down 15% in the first quarter as inflationary pressures repressed consumer demand for its party and occasion wear. The figures were also hampered by comparison to a strong opening last year when Quiz benefitted from the rebound in consumer spending as pandemic restrictions lifted.

READ MORE: Fashion chain Quiz gets set for the next challenge

Led by founder and chief executive Tarak Ramzan, the Glasgow-based company pointed out that its like-for-likes during the three months to June were “broadly consistent” with pre-Covid levels.

But given the economic uncertainties, it is predicting profits will remain flat this year. The board of directors have also yet to recommend the reinstatement of a dividend payment to shareholders.

Mr Ramzan said the challenging backdrop looks set to continue into the second half of the financial year, but told shareholders he was confident the group can achieve profitable growth in the longer-term.

“We continue to firmly believe that the Quiz brand has a clear, differentiated position in the market and continues to resonate with a broad age range of customers,” he said. “The group continues to focus on achieving its online growth potential through its website and we were encouraged by the increase in sales and active customers during the year.

READ MORE: Glasgow Quiz Clothing ‘vindicated’ in new results

“The trading environment in the opening months of the new financial year has been tough reflecting the widely-publicised external economic factors impacting consumer demand. Whilst this challenging backdrop is expected to continue into the second half, the board remains confident that the group’s omni-channel business model and differentiated brand will enable the group’s long-term success and profitable growth.”

Quiz is currently trading from 65 UK and five Irish stores, having opened three new outlets since the end of the financial year. In total, it is planning to open 10 new stores this year with a focus on shopping centres, though it will also open on the high street if it can find the right occupational costs.

The group added that benefits of its previous store restructuring were reflected in a positive financial contribution from its physical outlets.

Kast, the Quiz subsidiary formerly in charge of the group’s physical store estate, went into administration in June 2020 with the immediate closure of 11 stores and the loss of 93 jobs. Kast’s stock and some of its assets were then sold in a pre-pack deal to Zandra, another Quiz subsidiary, for £1.3m in cash.

READ MORE: Quiz salvages profit from the demise of Kast as sales plummet

Online sales during the year to March via the Quiz website were up 13%, offering what the company described as “significant long-term profitable growth potential for the group”. The number of active customers increased by 11% on the previous year to reach 620,000.

Georgia Pettman, retail analyst with Panmure Gordon, said the company is not immune to the wider macroeconomic climate but is making “longer-term strategic advancements surrounding space and systems”. The broker it therefore predicting a return to profitable growth in 2025.

“Quiz made progressive steps in rebuilding profitability in FY23, [and] although we expect gross profit margins to remain ahead of pre-pandemic levels in the year ahead, cost pressures (particularly wage inflation) will persist,” she said.

“We are encouraged by the efforts in right-sizing distributionn facilities and its store estate as well as Quiz’s desire to balance customer acquisition efforts and drive productivity/frequency of its existing customer base.”

Shares in Quiz, which are listed on London’s Alternative Investment Market (AIM), closed yesterday’s trading nearly 12% lower down 1.25p at 9.4p.

 

 

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