QUIZ PLC (LON:QUIZ) has warned that revenue for the year would miss market forecasts after taking a hit from the collapse of House of Fraser in the first half.
Shares tumbled 25.5% to 110p in afternoon trading.
The fashion retailer, which has historically operated 11 House of Fraser concessions and sold its products through the department store chain’s website, said sales at its store and concessions weakened in September due to less footfall.
QUIZ took a £0.4mln charge in the first half related to House of Fraser’s entry into administration in August after which Sports Direct International agreed to buy the chain for £90mln.
Revenue in the first half still rose 19% year-on-year to £66.7mln, as an unusually hot summer helped sales. Sales at UK stores and concessions increased 9% to £37.1mln while online sales jumped 44% to £20mln and international sales gained 16% to £11.6mln.
However, sales online sales through third-party websites were at a similar level to the second half, missing the company’s expectations. QUIZ said it was working closely with its third-party online partners to try to address this performance in the second half.
First-half earnings to fall short of estimates
The group predicts earnings (EBITDA) for the first half of at least £5.5mln, which is £1.5mln lower than its previous estimate, as a result of worse-than-expected sales through third-party online partners in the second quarter, a poor performance of UK stores and concessions in September and the provision against outstanding debt owed by House of Fraser.
Quiz expects revenue decline and flat earnings
For the year to 31 March 2019, revenue is expected to be lower than current market estimates at about £138mln, down from £116.4mln in 2018. EBITDA for the year is anticipated to be flat at £11.5mln.
“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,” said chief executive Tarak Ramzon.
“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 company said its full interim results will be posted on November 27.
QUIZ was due to report its trading update next Thursday but brought the statement forward to today.
Ted Baker also hit by House of Fraser collapse
The British fashion label incurred a one-off £0.6mln charge for debts owed by House of Fraser, where it has concessions, and said it does not expect to recover the money.
The retailer also warned that the second half of the year will "remain challenging" due to a tough retail market.