Quiz, Glasgow fashion firm, swings to loss

Shares of embattled Glasgow-based fashion firm Quiz fell about 9% on Wednesday after it published results for the six months ended September 30, 2019.

Quiz swung to a loss before tax of £6.8 million compared to a £3.8 million profit a year earlier as its revenue fell 5.1% to £63.3 million from £66.7 million.

And the firm took a £7 million exceptional charge “recognised in relation to impairment of store assets and onerous lease provisions.”

Underlying pretax profit fell to £600,000 from £4.2 million a year earlier.

Quiz CEO Tarak Ramzan said: “The group’s performance has resulted in an underlying profit before tax of £0.6m.

“Whilst it is disappointing to report a decline of profits year-on-year, management are focused on implementing the actions identified further to the group’s business review conducted earlier in 2019.

“We are pleased to report progress improving gross margins and reducing costs across the business, and will look for further improvements to develop our omni-channel offering. 

“QUIZ has continued to achieve sales growth in its international business and, in particular, online despite the challenging trading conditions.

“This has been supported by effective marketing investment including a successful collaboration with TV star Samantha Faiers.

“The group has continued to generate cash and had £7.2m of cash at the period end.

“The board remains firmly focused on further improving the group’s financial performance and growing revenues with a strong focus on QUIZ’s online and international channels. 

“The exceptional charge incurred in relation to store impairments and onerous leases is partially attributable to the structural shifts whereby consumers are increasingly shopping online. 

“We have a clear customer focus, a healthy brand and a flexible model that the board believes will enable QUIZ to adapt to the changing retail environment and return to profitable growth in the medium term.”

Analysts at Peel Hunt wrote: “QUIZ’s interims reflect a tough half, with core LFL under pressure and the brand struggling to gain much traction.

“The gross margin and the cost savings did emerge so the profit outcome is as flagged but there are write-offs to asset values here.

“Current trading remains weak, with October especially troublesome.

“However, Black Friday did show some better signs with the Sam Faiers collaboration doing well.

“We still expect losses this year (very slightly less than before) but this is still a stock that is fraught with risk and we would not get involved.”