Quiz tumbles as it warns over profits and revenues
Fast fashion retailer Quiz was under the cosh on Friday as it warned that earnings for the first half of 2019 would be lower than previously expected, while full-year revenue could fall short of current market expectations.
The company, which said last month that it would take a £400,000 hit from the collapse of House of Fraser, 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 HoF debt.
First-half 2019 earnings before interest, taxes, depreciation and amortisation are now expected to be not less than £5.5m - £1.5m lower than the company previously expected. In addition, the group said it has "taken the prudent assumption" that should the trend in online third-party sales continue, group revenue for the full year to the end of March 2019 would undershoot current market views of around £138m, down from £116.4m in 2018, while group EBITDA would be around £11.5m.
In the six months to 30 September, group revenue rose 19% to £66.7m despite challenging external trading conditions. Meanwhile, sales in UK standalone stores and concessions were up 9% to £35.1m. Sales were especially strong through this channel through the summer, but September saw a drop in footfall that led to a lower sales performance.
Online revenue was 44% higher at £20m and sales from the brand's own websites were up 70% year-on-year. International sales were up 16% to £11.6m, but online sales through third-party website were broadly flat compared to the second half of 2018, behind the group's expectations. Quiz said it's "working closely" with its third-party online partners to try to address this trend during the second half.
Chief executive Tarak Ramzan said: "I am pleased to say that our new Quiz X TOWIE ranges have been well received and the most recent trading week has seen an improving trend following a very challenging September in the UK.
"Although online sales through our third-party partners have been disappointing and will impact the group's performance for the full year, the changing mix towards increased own-website sales will support profitability growth moving forward.
"The continued growth of the Quiz brand in combination with our well-invested infrastructure and flexible business model continue to underpin the board's confidence in the group's long-term prospects."
Quiz had been scheduled to release its trading update next Thursday.
At 1515 BST, the shares were down 25.5% to 110.02p.