QUIZ, the omni-channel fashion brand, announces a trading update for the six-month period to 30 September 2019 (“H1 2020” or the “period”). Overall, the Group’s trading has been broadly in line with the Board’s expectations against the backdrop of a difficult UK retail environment.
Group revenue in the period decreased by 5% to £63.3m (H1 2019: £66.7m). Gross margin for the period is expected to be in line with the Board’s expectations at approximately 61%.
Online revenues grew by 7% to £20.0m (HI 2019: £18.7m), once adjusted for unprofitable revenue streams terminated during the year. Total online revenues in the previous period were £20.0m, consistent with the current year. The Group has continued to experience solid growth through its own QUIZ websites, with sales increasing by 12% year-on-year. This reflects continued investment in the Group’s online proposition and product range, as well as effective marketing
As has been widely reported across the sector, and as previously stated by QUIZ, the trading conditions on the UK high street have remained very challenging. The Group’s stores and concessions have experienced a reduction in footfall during the period against the prior year, resulting in weaker than initially anticipated sales. Sales in the Group’s UK standalone stores and concessions decreased by 11% to £31.3m in H1 2020 (H1 2019: £35.1m). The rate of decline experienced has reduced in recent weeks. We continue to focus on improving the performance of our physical retail outlets and continue to believe in their importance to our omni-channel model and we are actively managing our stores and concessions to ensure their profitability. The average lease length on our stores remains relatively low at 26 months and we continue to appraise the economics of each store as leases come up for renewal.
Our international sales comprise stores and concessions in the Republic of Ireland and Spain as well as franchise operations in a number of countries. International sales increased by 3% to £12.0m in H1 2020 (H1 2019: £11.6m) reflecting growth in revenue from the franchise operations and Spanish stores. This growth is partially offset by a decline in sales in Irish stores and concessions consistent with the pattern experienced in the UK.
At 30 September 2019, the Group had net cash of £7.1m (31 March 2019: £7.5m).
In line with the previously announced outcome of the Board’s business review undertaken earlier in the year, management have continued to take actions to achieve of the objectives of this review including improving the gross margin generated, reducing costs across the business, addressing the decline in footfall in stores and concessions, and the optimisation of QUIZ’s omni-channel model. Further to this we remain confident that gross cost savings of between £2m to £3m are achievable in the medium term.
Commenting on trading, Tarak Ramzan, Chief Executive Officer, said:
“Overall, the Group’s trading performance in the first half has been broadly in line with the Board’s expectations despite the difficult UK trading environment. Sales growth through QUIZ’s websites has continued, reflecting the investment in our product range and marketing initiatives.
Whilst trading conditions are expected to remain challenging in the near term, the Board remains confident that underpinned by QUIZ’s flexible business model and an increasing online focus, the Group can return to sustainable profitable growth in the medium term.”