Shares fall 50% at Glasgow fashion firm Quiz

UPDATE 2 — Shares of Glasgow-based fashion firm Quiz fell more than 50% after it said in a trading update it recorded “a significant shortfall in sales” and that it will “be reviewing all aspects of the business over the coming months.”

Quiz also cut its fiscal year 2019 revenue and core earnings outlook.

The fashion firm gave the news in an update on trading for the period between January 1 and February 28, 2019, and its expectations for the financial year ended March 31, 2019.

The Quiz statement read: “During the period, the uncertain consumer spending backdrop has remained challenging for Quiz.

“As a result, the group has recorded a significant shortfall in sales compared to the board’s prior expectations.

“Furthermore, there has been a requirement to apply higher than anticipated discounts to clear excess stock.

“Quiz has continued to increase sales online during the period with group online revenue increasing by 16.2%.

“However, this growth has been offset by an 11.1% decrease in revenue from the group’s UK standalone stores and concessions.

“Consequently, group revenue for Quiz decreased by 1.7% in the period against the comparable period last year.

“The group’s Christmas trading update on 11 January 2019 provided guidance for revenue and profits for FY 2019 which, at that time, reflected the most recent sales trends through our online, UK stores and concessions sales channels in addition to the impact of additional available retail space compared to the previous year. 

“The board previously anticipated that revenues for FY 2019 would be approximately £133.0m, which would have represented growth in sales in the final quarter of 9.2% compared to the previous year resulting in anticipated EBITDA of £8.2m.

“Given the significant shortfall in sales experienced in the final quarter of FY 2019 to date, and should this trend continue throughout March 2019, the group anticipates revenues for FY 2019 to now be approximately £129.0m. 

“It is also expected that the increased level of discounting will have a material impact on gross margins generated in the final quarter of FY 2019.

“The board now anticipates that the group’s EBITDA will be approximately £4.5m for FY 2019.

“The Quiz balance sheet remains strong with net cash of £8.9m as at 5 March 2019.

“Inventory continues to be carefully managed with current stock levels similar to the previous year.

“Given the group’s recent trading performance, the board is instituting a thorough review of all aspects of the business with a view to mitigating the effects of changed trading conditions. 

“We expect to report findings from this review at the time of the preliminary announcement of full year results for FY 2019, which is expected in June 2019.”

Quiz CEO Tarak Ramzan said: “Whilst the board remains confident in the strength and appeal of the Quiz brand, as demonstrated by our continued sales growth online, this has been a highly disappointing trading period for the group.

“As a result, the board will be reviewing all aspects of the business over the coming months to ensure that we can deliver the group’s long-term potential despite the changing consumer backdrop and challenging trading conditions.”