By Kristy Dorsey
Fast fashion retailer Quiz managed a profit in the first half of the financial year after booking a gain on the administration of a subsidiary in charge of its physical store estate, a result that would have otherwise been unfeasible as revenues plunged by 73 per cent.
Best-known for its occasion and dressy wear, Glasgow-headquartered Quiz has been hit by a drop in demand as lockdown restrictions have closed stores and brought a halt to most social gatherings. Although it has increased it casual offering, this has not been enough to compensate for the decline in demand for its core range.
Revenues for the six months to the end of September fell to £17.2 million, down from £63.3m in the same period a year earlier. However, a non-cash gain of £16.2m arising on June’s administration of its Kast subsidiary allowed the company to report a pre-tax profit of £10.6m against the previous period’s loss of £6.7m.
Kast operated 82 stand-alone Quiz stores trading in the UK and Ireland. Its administration led to the immediate closure of 11 stores and 93 job losses, with Kast’s stock and some assets sold in a pre-pack deal to Zandra, another Quiz subsidiary, for £1.3m in cash.
READ MORE: Quiz chief executive ‘confident’ despite crash in sales
Most of the £16.2m gain on that deal came from shedding lease liabilities on the standalone stores. Excluding that, Quiz made an underlying loss of £5.6m against a profit of £300,000 a year earlier, while underlying earnings fell £3.4m into the negative.
The group currently has 60 stores in its UK estate and a further four in the Republic of Ireland. It also has 142 concessions, although the vast majority of these are within department and clothing stores whose own futures look uncertain.
They include 85 concessions within Debenhams, whose stores are expected to close following the acquisition of its intellectual property assets by Boohoo. A further 29 are within Outfit stores operated by the Arcadia group, which like Debenhams is in administration.
Quiz noted that it has no outstanding balances due from those two businesses, and that the redundancy costs that would arise from those stores closing “would not be significant”.
Despite these difficulties, Quiz founder and chief executive Tarak Ramzan said the group retains faith in its fundamental offering. This was underlined by a stronger sales performance in December, when the easing of lockdown measures allowed trading to resume across some physical outlets.
The group further noted that it had net cash of £3m as of January 25, down from £4.8m at the end of October. It has a further £3.5m in undrawn banking facilities that have been extended to the end of October 2021.
“As with other omni-channel retailers, Quiz has faced significant challenges as a result of the Covid-19 pandemic,” Mr Ramzan said. “We have taken a number of actions to protect our customers and people, preserve liquidity and restructure the size and cost base of our store estate to adjust to the new normal of retail.
READ MORE: Glasgow’s Quiz distances itself from worker exploitation claims
“Whilst we continue to rebalance our product offering towards more casual clothing, reflecting near-term customer demand, given our focus on occasion wear, demand for our products has been impacted significantly by the pandemic. However, we remain confident in the strength of our brand and are highly confident that demand for the brand’s trademark occasion wear will recover when restrictions on social events are eased.”
Quiz said it was continuing to monitor it suppliers closely after it was forced last July to suspend one Leicester-based garment manufacturer following allegations of worker exploitation.
Turning to more recent trading, sales during the three months to the end of December were down 59% on the same period a year earlier at £15.2m. This included hefty double-digit declines in online sales, UK stores and international outlets.
Shares in AIM-listed Quiz closed unchanged yesterday at 7.36p.
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