Questions for QUIZ as fast fashion chain sinks to a loss
QUIZ has blamed economic uncertainty and shoppers holding back spend on the high street as the multichannel fast fashion retailer sunk into the red.
The company said that even though actions to address the poor performance are under way, a number of stores will continue to be loss-making.
It saw a pretax loss of £6.8 million for the six months to 30 September, compared with a £3.8 million profit in the same period a year ago.
QUIZ took the hit primarily due to a £7 million one-off charge related to onerous leases and a re-evaluation of the store estate.
On an underlying basis, which strips out one-off costs, it made a profit of £2.7 million.
Tarak Ramzan, founder and chief executive, said: “Much of the UK retail sector has remained under pressure during the period impacted by macro-economic uncertainty as well as the accelerating structural shift to online retailing.
“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 omnichannel offering.
“We have also taken actions to address the performance of our UK stores and concessions through renegotiating rents where possible and exiting a number of loss-making concessions.
“Over the next two years we will have the opportunity to renegotiate or terminate leases in 50% of our UK stores.
“However, before leases can be renegotiated at current and projected sales levels a number of our stores will lose money.”
Sales during the current period fell 5% compared with a year earlier, to £63.3 million, although the entire fall came from shoppers not spending as much in stores, where sales in the UK were down 11%.
By comparison, online sales held up and were flat during the period at £20 million.
QUIZ also opened two stores and nine concessions during the period, and closed seven sites, as it took a £400,000 hit from the collapse of House of Fraser, where it operated from.
Overseas sales were up 7% with growth in its franchises in the US and Middle East.
In October the company unveiled plans for a cost-cutting exercise to save between £2 million and £3 million a year, with a bigger push towards online sales. The dividend was also scrapped.