("QUIZ" or the "Group")
QUIZ, the omni-channel fast fashion brand, announces a trading update for the for the six-month period to 30 September 2018 ("H1 2019" or the "period").
Group revenue increased by 19% to £66.7m (H1 2018: £56.1m) despite challenging external trading conditions. The Group's performance reflects continued progress across each of the QUIZ brand's distribution channels as shown below.
UK stores and concessions
Sales in the Group's UK standalone stores and concessions increased by 9% to £35.1m in H1 2019 (H1 2018: £32.3m). Sales were particularly strong through this channel during the Summer months, however the Group experienced a lower sales performance across its stores and concessions during September reflecting less footfall.
As previously reported, further to House of Fraser's entry into administration and the selective acquisition of assets by Sports Direct International plc, the Group will provide £0.4 million in the six months to 30 September 2018 in relation to outstanding debtor balances and other potential costs.
Online revenue increased by 44% to £20.0m in H1 2019 (H1 2018: £13.8m) reflecting investment in our online platform, effective marketing and the appeal of our ranges. In line with our strategy and as anticipated, the Group generated strong online growth through QUIZ's own websites where sales increased by 70% year-on-year. Online sales through the Group's own websites carry a higher margin than online sales through third-party websites.
Online sales through third-party websites were at a similar level compared to H2 2018. This performance was behind our expectations and declined during the second quarter of the financial year. We are working closely with our third-party online partners to try to address this trend during the second half.
The QUIZ brand continues to grow across its target international markets with the international sales increasing by 16% to £11.6m in H1 2019 (H1 2018: £10.0m) largely underpinned by growth in our international franchise operations. The Group is pleased with the development of sales in the USA at this early stage and the benefit of franchises opened in other international markets in the previous year, along with the revenues generated from the three standalone Spanish stores which opened last Autumn.
Gross margin for the period is expected to be in line with the Board's expectations.
The Board anticipates that, as a result of lower than expected sales through third-party online partners in the second quarter of the financial year, the performance of our UK stores and concessions during September and the provision against the outstanding House of Fraser debt, EBITDA for H1 2019 will be not less than £5.5m, being £1.5m lower than its previous expectations. In addition, the Board has taken the prudent assumption that should the trend in online third-party sales continue during the second half of the financial year, Group revenue for the full year to 31 March 2019 would be lower than current market expectations at approximately £138m (FY 2018: £116.4m) and the Group's EBITDA for FY 2019 would to be in the region of £11.5m.
Commenting on trading, Tarak Ramzan, Chief Executive Officer, said:
"QUIZ has delivered further good growth during the period despite challenging external trading conditions.
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."
The Group intends to announce its Interim Results for the six months to 30 September 2018 on 27 November 2018.
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Via Hudson Sandler
Tarak Ramzan, Chief Executive Officer
Gerry Sweeney, Chief Financial Officer
Sheraz Ramzan, Chief Commercial Officer
(Nominated Adviser and Sole Broker)
Ben Thorne / Alina Vaskina / Atholl Tweedie (Corporate Finance)
Erik Anderson (Corporate Broking)
+44 (0) 207 886 2500
Hudson Sandler LLP (Public Relations)
+44 (0) 207 796 4133
QUIZ is an omni-channel fast fashion brand, specialising in occasion wear and dressy casual wear.
QUIZ delivers a distinct proposition that empowers its fashion forward customers to stand out from the crowd.
QUIZ's buying and design teams constantly develop its own product lines, ensuring the latest glamorous looks at value prices. This fast, flexible supply chain, together with the winning formula of div, quality, value and speed-to-market has enabled QUIZ to grow rapidly into an international brand with more than 300 standalone stores, concessions, franchise stores, wholesale partners and international online partners in 20 countries. The Group currently operates 71 standalone stores and 158 concessions in the UK.
QUIZ operates through an omni-channel, fast fashion business model, which encompasses online sales, standalone stores, concessions, international franchises and wholesale arrangements.
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