Bosses at Quiz, the Glasgow-headquartered fashion retailer, are confident of returning the business to “sustainable profitable growth” in the medium term after unveiling a fall in sales amid “difficult” trading conditions.
The “fast fashion” business, which operates 73 standalone stores and 171 concessions in the UK and has a growing international presence, said group revenue had fallen 5 per cent to £63.3 million in the six months to 30 September, compared with the year before.
Gross margin for the period is expected to be in line with management expectations at about 61 per cent.
There was a stark contrast between the high street and online sales performances during the period.
Takings at the group’s UK standalone stores and concessions fell by 11 per cent to £31.3m, though the firm noted that the rate of decline had reduced in recent weeks.
Online revenues grew by 7 per cent to £20m, once adjusted for unprofitable revenue streams terminated during the year.
The group said it had continued to experience “solid” growth through its own Quiz websites, with sales increasing by 12 per cent, year-on-year. It credited the rise to “continued investment in the group’s online proposition and product range, as well as effective marketing”.
International sales, meanwhile, rose 3 per cent to £12m reflecting growth in revenue from the firm’s franchise operations and Spanish stores.
Quiz said it was working on improving gross margins, reducing costs across the business, addressing the decline in footfall in stores and concessions and optimising its “omni-channel model”. It is confident of making gross cost savings of between £2m and £3m in the medium term.
Founder and chief executive Tarak Ramzan told investors: “Overall, the group’s trading performance in the first half has been broadly in line with the board’s expectations despite the difficult UK trading environment.
“Sales growth through Quiz’s websites has continued, reflecting the investment in our product range and marketing initiatives.
“Whilst trading conditions are expected to remain challenging in the near term, the board remains confident that underpinned by Quiz’s flexible business model and an increasing online focus, the group can return to sustainable profitable growth in the medium term.”
The retailer warned earlier this year that profits would be lower than expected as growth came in under expectations. It is due to announce its full interim results on 4 December.
Arlene Ewing, investment manager at Brewin Dolphin, noted: “The tough backdrop for retail continues to take its toll on Quiz. The one bright spot is the online offering which has seen decent growth.
“Investors will have a keen eye on the results of the root and branch review announced earlier in the year.”