Quiz today reported sales 12% higher in its latest financial year – with online sales up by more than a third – but a 97% slump in profits at the end of its latest financial year against the backdrop of an “exceptionally challenging retail environment”. It has stopped selling via two third-party online retailers and is closing about 20 department store concessions as it looks to boost profitability.
The fast fashion retailer, ranked Top150 in IRUK Top500 research, said that group revenue of £130.8m in the year to March 31 was 12% up on the same time last year. Online sales grew by 34% to £41m, representing 31.4% of group revenue – up from 26.3% a year earlier. Sales through its own website were up by 54%. International sales of £23m were up by 8%, while UK in-store sales were up by 4% at £66.9m. Despite sales growth, pre-tax profits of £0.2m were 97% down on the £8.5m reported a year earlier.
What has gone wrong…
The retailer said that although sales had grown across its channels, that growth was still behind expectations – leaving it with excess stock that had to be cleared through discounting. As a result, while more sales were made – they were made less profitably. Profits were also hit because investments in infrastructure were made in the expectation of higher sales growth that failed to materialise.
The UK retail environment, said Quiz, was experiencing “an unprecedented pace of change” as shoppers take more of their spending online, and less to stores. This, it said, was “creating structural challenges for retailers across the UK high street”. At the same time consumers are facing “extreme levels of macro-economic and political uncertainty”.
…and what the plan is
Quiz said the business needed to be flexible in the context of this rapidly changing environment. While its omnichannel distribution model gave it the flexibility it required, it would now focus more sharply on the “significant online opportunities” while actively managing its store estate. Its stores, it said, have an average lease length of 26 months, while concessions can be exited at short notice. There will be a focus on using its store network for online collections, returns and to improve stock availability across the estate, while the retailer will also focus on retaining existing and previous customers, given the high cost of customer acquisition. Measures directed at this include the launch of the QVIP delivery subscription scheme.
The retailer now plans to end some online contracts with third-party retailers because they were unprofitable, despite helping to boost sales. It also plans “a reduction in our exposure to UK department stores” and to focus on cost controls – with a medium-term plan of saving between £2m and £3m a year. It is to close 20 concessions and says that it is present in 10 of the 22 Debenhams stores that are set to close – however these stores are likely to remain open through most of its current financial year.
Founder Tarak Ramzan, founder and chief executive of Quiz, said: “Despite the challenges faced by the group during the period, Quiz’s focus has remained as strong as ever on delivering great products at outstanding value, thereby strengthening our brand’s positive reputation amongst a growing customer base. As a result, we have continued to achieve sales growth across our omnichannel model both in the UK and internationally.
“As announced in March, the board and senior management team have carefully reflected on our business, strategy and prospects to ensure that we are able to navigate what remains a volatile trading environment and restore profitable growth. We have conceded this review process with sharpened focus and a clearer vision of what is required to ensure that Quiz succeeds in a dynamic retail sector and achieves its strategic objectives.
“The Quiz brand continues to grow momentum with a growing customer base. Whilst trading conditions have remained challenging in the year to date, the board remains confident that underpinned by our flexible business model and an increasing online focus, the group can return to sustainable profitable growth.”
Omnichannel at Quiz
Quiz trades online and through a combination of its own, concessionary and franchise stores, and through wholesale partners. In the UK it has 73 standalone stores and 174 concessions.
Investment in online during the year included the Quiz VIP delivery pass, a buy now, pay later trial with Klarna and investment in an Emarsys platform in order to improve payment options and customer personalisation. It also expanded the range, launching menswear, swimwear and petite ranges.
Image courtesy of Quiz