Quiz today counted the cost of a “challenging year” on its multichannel fashion business as sales fell both online and offline, and one-off costs took it to a £29m pre-tax loss. And that was before the worst of the Covid-19 lockdown hit - pulling down its sales still further.
The retailer is now moving its design emphasis from occasion wear to more casual clothing as its customers’ lifestyles change in the light of Covid-19 and is rethinking the future of five stores, having closed three in Spain and cut its UK department store concessions.
The retailer today reported its figures for the year to March 31 2020 and an update for the six months to September 30. It said the Covid-19 pandemic, which hit towards the end of that period, had come on top of a year that was already characterised by economic uncertainty and the shift towards online shopping. The pandemic’s worst effects have been felt in its current financial year.
Tarak Ramzan, founder and chief executive of Quiz, said: “Whilst we are pleased with the further growth in our customer base during FY20, this was a challenging year for Quiz characterised by macro-economic uncertainty and challenges presented by the accelerating structural shift towards online retail. In addition, from early March the group, along with the wider retail sector, faced significant challenges as a result of the Covid-19 pandemic. The board has taken decisive action to protect its customers and its people, preserve liquidity, and restructure its store estate to align the group’s business model to the new reality of store retail.”
Quiz shops all closed during the Covid-19 lockdown of non-essential retailing – 64 have since reopened – including 60 in the UK – while the future of five is still being debated in negotiations with landlords. Before lockdown, the retailer traded from 75 UK stores, seven in the Republic of Ireland and three in Spain. The Spanish stores have now closed. It has now reduced the nuer of concessions it has within department stores to 143 from 168 at the beginning of its 2019/20 financial year.
Overall, Quiz reported total revenue of £118m in the year to March 20, 10% down from £130.9m a year earlier. It reported a pre-tax loss of £3.7m before exceptional items of £25.7m – including a £7m write-down in the value of its stores and a £5.2m write down in goodwill related to its in-store concessions within other retailers’ shops – brought its bottom-line pre-tax loss to £29.4m. A year earlier it reported a pre-tax profit of £0.2m.
Lockdown was a factor as store sales fell by 12% to £58.7m in the year to March 31. Sales also fell online in the year to March, by 9% to £37.5m, after the retailer moved away from selling via two third-party retailers in the previous year in order to focus on profitable sales on its own website and via other partners. Sales via its own website were down by 0.6%, but, says Quiz, were more profitable. International sales fell by 5% to £21.8m.
The worst effects have been felt in the current financial year – Quiz’ total sales in the six months to September 30 came to £17.2m - down by 73% on the £63.3m generated at the same time last year, with in-store sales down by 85% to 4.7m and online sales down by 49% to £9.8m.
Quiz made 31.8% of its sales online, by revenue, during the year and its active customer numbers rose by 11% to 638,000. Investment in online included the launch of the Quiz VIP delivery pass and a partnership with Klarna.
The fast fashion retailer, which specialises in smart casual and occasion wear, is now moving further towards casual clothing as its customers’ lifestyles change in the light of Covid-19.
“We continue to rebalance our product offering towards more casual clothing to meet the changing lifestyles of our customers,” said Ramzan. “Looking ahead, we remain confident in the strength of our brand and believe that underlying customer demand remains strong for the brand’s trademark occasion wear which we aim to capitalise on when restrictions on social events are eased.”
In July 2020 Quiz said it was investigating allegations that a factory making Quiz products in Leicester was not paying the National Living Wage in January 2020. It found the factory was no longer trading and that it was not able to substantiate the allegations – and it has not found any evidence of breaches in its other factory suppliers. Now it has reviewed its supply chain systems to gain increased visibility and has appointed a new ethical compliance manager and introduced a new process to prevent unauthorised sub-contracting. It is now carrying out more audits and random factory site visits and is also working with one of its major partners to visit its suppliers and compare best-practice processes.
The retailer said in today’s full-year results statement: “The board is acutely aware of the responsibilities the group has to source its clothes in a responsible and ethical way as well as the challenges posed by having a global supply chain. We recognise that our customers expect the latest looks from us, but we know that this comes with a duty to ensure our products are sourced and manufactured ethically and responsibly. The responsibility for meeting these expectations is led by the board and is integral to our core values which run throughout the Quiz business.”
Quiz is a Top250 retailer in RXUK Top500 research.