Quiz warns of lower profit after disappointing Christmas
Multi-channel fashion retailer Quiz has warned its profit and revenue will be lower after Christmas trading failed to meet expectations.
The company, which has 71 stores and 169 concessions in the UK as well as a sizeable online business, said underlying earnings would be about £8.2m for the full year.
Revenue is also set to fall short of market expectations, coming in at around £133m.
Shares in the company dropped more than 25% in early trading on Friday.
In an update for the six weeks to 5 January, Quiz said revenue was up 8.4% on the same time last year. This marked a slowdown on last year’s 31.9% growth, despite higher than expected discounting.
The group said the retail trading environment had been particularly challenging in November, though had shown some improvement towards the end of the period.
As a result of slashing prices to shift stock, the group’s profit margin is expected to reduce to 60.5% in the six months to March 31, compared to 62% in the first half.
Neil Wilson of Markets.com added: “It looks like discounting is really killing retailers. There is just no way they can pass on higher costs by raising prices. Consumers are simply not prepared to pay more. The discounting vicious circle means shoppers are now expecting big price reductions.”
Quiz delivered an increase in its high street shops and concessions, with revenue up 1.6%. Meanwhile online revenue was 34.1% higher.
Chief executive Tarak Ramzan said: “Against the backdrop of challenging trading conditions over recent months, Quiz has delivered further revenue growth over the Christmas period driven by the performance of our own websites.
“However, the growth and the margin achieved have been below our initial expectations and, consequently, the board considers it appropriate to revise its sales and profit expectations for the current year.
“We remain confident about Quiz’s long-term potential as an omni-channel fashion brand with a clear customer focus. Management’s utmost priority remains achieving further growth for the business and improving profitability in the future.”
