A TOTAL of £20 million was wiped off the value of fashion retailer Quiz yesterday after its shares plummeted when the business issued its third profit warning for the current financial year.

The firm, which is based in Glasgow, issued a trading update noting that as it had “recoded a significant shortfall in sales compared to the board’s prior expectations” in January and February, it now expects profits for the year to the end of March to be half of what it had been anticipating at the start of 2019.

In October the firm warned that profits for the year would fall below the £11.5 million it generated in 2017/18, while in January it said that EBITDA (earnings before interest, tax, depreciation and amortisation) for the year was expected to come in at £8.2m.

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It has now revised that figure down to £4.5m, noting that an “uncertain consumer spending backdrop” had led to lower than expected sales as well as the “requirement to apply higher than anticipated discounts to clear excess stock”.

The firm’s share price halved from 32.1p to 16.1p as a result, leading its market capitalisation to drop from £39.9m to £20m. That means the business is now worth 92% less than it was when it went public in 2017, with a share price of 190p giving it a valuation of £236m at the time of its stock market flotation.

Quiz chief executive Tarak Ramzan said that as the period between January and February had been “highly disappointing” and indicated that the firm intends to rationalise its operations “with a view to mitigating the effects of changed trading conditions”.

“The board will be reviewing all aspects of the business over the coming months to ensure that we can deliver the group’s long-term potential despite the changing consumer backdrop and challenging trading conditions,” Mr Ramzan said.

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The company will unveil the findings of the review in June, when it will also report its final results for the 2018/19 year.

This is not the first time Quiz has suffered as a result of difficult trading conditions, with the initial incarnation of the business – Tarak Clothing Company – filing for administration in 2009.

Mr Ramzan and his son Sheraz, who is Quiz chief commercial officer, set up Kast Retail to buy back the majority of the business at that time, saving 400 jobs and losing just four of its then portfolio of 48 stores as a result.

Having built the business back up by following a so-called omnichannel approach that favoured bricks and mortar stores as well as concessions and online selling, Mr Ramzan floated it on the London Stock Exchange’s Alternative Investment Market in July 2017.

Quiz used the proceeds of the listing to expand its store network, opening five shops and six concessions in the UK and three stores in Spain in the following year.

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The investment appeared to pay off, with the firm reporting a 30% rise in sales in the year to March 2018. Much of the increase came from the rapid growth of its online platform, with the £30.6m of online sales it booked during the period representing a 158% increase on the previous year.

In its trading update the business said that online sales continued to grow during January and February this year, but that the 16.2% rise was offset by an 11.1% decrease in revenue from its UK standalone stores and concessions. As a result overall revenues were down by 1.7% on the same period last year.

The firm expects its full-year revenues to come in at £129m, which would represent a rise of 11%.