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Quiz shares rise as it reports half-year growth despite profit dent from House of Fraser collapse

The AIM-listed clothing retailer reported EBITDA for the period of £5.6mln, up 11% on the same period a year ago, while revenues climbed 19% to £66.7mln
Quiz model
Quiz's shares plunged 37% on October 5th after it cut £1.5mln from its half year forecasts

Quiz Plc (LON:QUIZ) shares rose in early trading Tuesday after the firm reported revenue and earnings growth in the half-year despite a dent from the collapse of department store House of Fraser earlier this year.

The AIM-listed clothing retailer reported underlying earnings (EBITDA) for the period of £5.6mln, up 11% on the same period a year ago, while revenues climbed 19% to £66.7mln.

Growth hits reduced targets after October share plunge

Despite growth, the EBITDA was still around £1.5mln lower than the group’s previous forecast after it was forced to cut its expectations in an October trading update 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.

READ: QUIZ shares plummet as House of Fraser collapse prompts profit warning

The market responded in turn, with shares plunging 37% on the day.

Gross margins in the first half were also squeezed, falling year-on-year to 62% from 63.5%.

Online surges

Across its divisions, the firm said online revenues had grown 44% to £20mln compared to the first half of last year, while international sales rose 16% to £11.6mln.

Online sales now represent 30% of the company’s sales, up from 25% a year ago, while the active customer base had jumped 89% year-on-year to 495,000.

Revenues from UK stores and concessions also increased 9% to £35.1mln in spite of the collapse of House of Fraser, with Quiz adding that it had opened two new stores and 13 concessions in the period.

Looking ahead, Quiz said the eight weeks to 24 November had seen a 10% year-on-year increase in sales, bolstered by 62% growth in its own brand websites.

The firm added that while its full year results would “be in part dependent on trading during the key Christmas period”, it was “well positioned” to deliver long-term profit growth.

Tarak Ramzan, founder and chief executive of Quiz, said that the firm had delivered “good revenue growth” in the period despite “challenging external market conditions”, mainly due to expansion across its distribution channels and online sales.

Ramzan added that the brand had seen “good sales momentum” in its core collection as well as across its extended ranges including QUIZCurve and the newly launched QUIZMAN range.

The group had also launched its second collaboration with TV show The Only Way Is Essex toward the end of the period, supported by its first-ever national TV advertising campaign.

Broker not convinced, slashes target price

In a note to clients, analysts at City broker Peel Hunt slashed its target price for the group to 40p from 105p saying that the results had been “where they were expected” following the October update, but November trading had been “very weak, with sales little more than flat”.

“Online sales have been very good so this implies that in-store it has been very weak, with LFL down in high single digits we assume,” the broker said, adding that it had cut its full-year EBITDA forecasts to £10mln from £11.6mln.

Shares were up 3.2% at 44.9p.

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