Quiz today reported a 73% drop in sales as Covid-19 hit sales in its stores and concessions, while restrictions on socialising discouraged shoppers from buying its occasion and dressy casual wear. The retailer has closed 15 stores and 20% of its concessions for good and warns that more than 100 concessions may follow in the wake of the Debenhams and Arcadia administrations. But it says shops will continue to contribute to the business in future, both in their own right and as a provider of multichannel collection and returns services.
The retailer, ranked Top250 in RXUK Top500 research, said today that it turned over £17.2m in the six months to September 2020, 73% down from £63.3m a year earlier. Sales in its stores fell by 85% over the period to £4.7m, while online sales halved to £9.9m. Sales via third-party websites fell by 57% at the same time, but the retailer says it is working with those sites to improve . International sales fell by 78% to £2.7m.
At the bottom line, it made a pre-tax profit of £10.6m, up from a loss of £6.7m a year earlier - when a £7m one-off charge had reflected a write down in the value of stores and leases. This year’s figure followed a gain of £16.2m after its Kast subsidiary went into administration during the half-year. Falling revenues, however, had led to a rise in discounting, and gross margins fell to 51.7% from 61.7% a year earlier.
Between October 1 and December 31, sales of £15.2m were 59% down on the previous year, with stores sales of £5.8m down by 69% and online sales of £616m down by 45%.
Quiz founder and chief executive Tarak Ramzan says: “As with other omnichannel retailers, Quiz has faced significant challenges as a result of the Covid-19 pandemic. We have taken a number of actions to protect our customers and people, preserve liquidity, and restructure the size and cost base of our store estate to adjust to the new normal of retail.
“Whilst we continue to rebalance our product offering towards more casual clothing reflecting near term customer demand, given our focus on occasion wear, demand for our products has been impacted significantly by the pandemic. However, we remain confident in the strength of our brand and are highly confident that demand for the brand’s trademark occasion wear will recover when restrictions on social events are eased.”
During the half-year the retailer went through a store restructuring that reduced rents and made leases more flexible. By the end of the period it had 55 shops in the UK and four in the Republic of Ireland – down from 75 previously. Since then, it has opened five more stores in the UK.
It has also reduced its concession numbers by 20% to 142. Of those remaining, 85 are in Debenhams shops and 29 in branches of Arcadia brand Outfit. Both businesses are in administration and Debenhams shops are expected to close following Boohoo’s acquisition of Debenhams. Quiz says redundancy costs as a result of concession closures will not be significant, and it has no financial exposure to outstanding balances from the businesses.
Looking ahead, the retailer says it still believes stores can make a positive contribution to the business, and it is planning measures to boost in-store footfall, including trialling new in-store product categories, while using its stores for online collections and returns and improving availability across its store estate.
As of January 25, the retailer has net cash of £3m and a further £3.5m in undrawn banking facilities and says its cost cutting measures mean it can return to profitable growth when market conditions improve. It also says it is monitoring its supply chain through an ethical code of practice.