Quiz revenue rises amid strong online sales

Fast-fashion company Quiz posted a drop in underlying interim profits on Tuesday, but revenues and reported profit rose amid continued growth across all channels despite "challenging external market conditions".

In the six months to 30 September, underlying pre-tax profit was down 11% to £4.2m. However, reported pre-tax profit was up 4% to £3.8m and group revenue grew 19% to £66.7m. Earnings before interest, taxes, depreciation and amortisation were 11% higher at £5.6m.

Online revenue - which now represents 30% of group sales - rose 44% to £20m in the half, while international sales increased 16% to £11.6m. Revenue from UK stores and concessions pushed up 9% to £35.1m.

Quiz website sales were up 70% in the first half, with website traffic increasing by 58% on the year and the active online customer base up 89% to 495,000.

Shares in the fashion retailer tanked back in October after it warned that earnings for the first half would be lower than previously expected and full-year revenue could fall short of market expectations. The company pinned the blame on lower-than-forecast second-quarter sales through third-party online retailers, the performance of its UK stores and concessions and the provision against the outstanding House of Fraser debt.

Chief executive officer Tarak Ramzan said: "Quiz has continued to deliver good revenue growth in the first half of the financial year despite challenging external market conditions. This performance was driven by further expansion across each of the brand's distribution channels with particularly strong sales generated online through Quiz's websites.

"Quiz has a clear customer focus, a proven 'test and repeat' model and a dedicated management team. With these strengths, and despite a challenging market environment, the board believes the group is well positioned to deliver long-term profitable growth."

The group said sales in the eight weeks to 24 November were up 10% on the year, underpinned by particularly strong sales growth through the brand's own websites of 62%.

"Whilst the group's full year results will, as always, be in part dependent on trading during the key Christmas period, we believe the group is well positioned to deliver long-term profitable growth," it said.

Shore Capital analyst Greg Lawless said that while the outlook statement is positive in sentiment, the 10% growth in sales still represents a slowdown from the first-half run-rate, which remains a concern.

"In our view life remains pretty tough for Quiz given high street conditions, particularly in the concessions stores in both House of Fraser and Debenhams," he said.

Meanwhile, Peel Hunt said the interims were where they were expected to be at £5.6m, given that management essentially pre-reported last month.

"All eyes were therefore straight to the current trading statement and it is weak," it said.

"Sales are up by 10% in the eight weeks so far in H2, and it is a tale of two months within that: October was good with sales growth in the high teens but November has been very weak, with sales little more than flat. Online sales have been very good so this implies that in store it has been very weak, with LFL down in high single digits we assume.

"We have to take the red pen to forecasts again and as a first stab we would imagine EBITDA would come out at around £10m for this year (we'll confirm post analysts meeting) down from £11.6m."

At 0930 GMT, the shares were up 3.2% to 44.90p.