Quiz CEO Tarak Ramzan and CFO Gerry Sweeney have blamed macro-economic factors for the retailer’s drop in revenues, but remain optimistic that it will be profitable again within the next two years.
The womenswear retailer plunged into the red with a loss before tax of £6.8m for the six months to 30 September – largely the result of a one-off £7m cost for the impairment of store assets and onerous lease provisions.
Group revenue was down 5% year on year to £63.3m, and underlying EBITDA dropped 54% to £2.7m for the six months to 30 September. The drop in revenue was blamed on a fall in store spending, which declined 11% to £31.3m. Online sales remained flat at £20m, and international sales grew by 3% to £12m.
“The store revenue is really down primarily due to the decline in traffic,” Ramzan told Drapers. “There are a few things at play, such as mass economic factors and Brexit affecting consumer spending.
“There’s also the shift to online. There are structural things that are happening whereby people are spending less offline and spending more online. These are a few factors that all fashion brands are being affected by.”
Ramzan said Quiz has a few initiatives in place to combat this, such as introducing new product categories. These include introducing its petite range into stores for the first time and expanding some of the existing categories, including dresses. The company is also looking at enhancing its digital offering in store by introducing click and collect.
Ramzan said online sales were flat because the retailer had exited some third-party online websites such as Zalando during the period, as they “weren’t proving to be very popular” with Quiz customers.
The “concentration moving forward” is for online, which makes up around one-third of total sales, and international expansion – non-UK sales make up around 51% of total sales. Quiz wants to expand its presence further into the US and the Middle East.
“Retail is currently a really challenging environment,” Ramzan said. “However, the company remains debt free and we have a strong cash balance. We feel we’re in a good position to deliver long-term growth. Once we get through achieving profitability, we feel quite optimistic about the future.”
CFO Sweeney agreed: “Next year onwards we will look to get the profits back up again. We’re looking at steady progress in terms of returning to profitability over the next two to three years.”