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Quiz to "work productively” with collapsed Debenhams as it keeps previously downgraded earnings forecast

“We note the recent announcement from Debenhams PLC that whilst they have entered into administration the underlying operating companies continue to trade as normal with suppliers expected to be unaffected,” Quiz said
Quiz
Shares rose more than 6% in morning trading

Quiz PLC (LON:QUIZ) shares jumped as the fashion retailer reported a 12% rise in full year revenue and said it would “continue to work productively” with Debenhams after the department store chain collapsed into administration.

Quiz has 108 concessions in UK Debenhams stores and 11 in the Republic of Ireland.

READ: Quiz shares halve as continued discounting forces it to slash profit forecasts once again

The company also sells its products through the Debenhams website.  

Sales from these activities represented 23% of revenues in 2019.

Debenhams entered administration on Tuesday after rejecting two last-ditch rescue deals from its largest shareholder, Sports Direct International PLC (LON:SPD).

“We note the recent announcement from Debenhams PLC that whilst they have entered into administration the underlying operating companies continue to trade as normal with suppliers expected to be unaffected,” Quiz said in a trading update for the year to March 31.

“We look forward to continuing to work productively with Debenhams going forward.”

Quiz also has concessions with House of Fraser, which Sports Direct rescued from administration last year.

Quiz maintains previously downgraded earnings guidance 

Excluding the £0.4mln of debt arising from the collapse of House of Fraser, Quiz continues to expect full year earnings (EBITDA) to fall to £4.5mln from £11.5mln last year.

Total full year revenue increased to £130.9mln from £116.4mln, led by growth in online sales.

Online sales gained 34% to £41mln while sales from UK stores and concessions grew 4% to £66.9mln and international sales edged up 8% to £23mln.

In March. Quiz said it would launch a “thorough review” of all aspects of its business after the fashion retailer once again warned that full-year results will be even worse than feared.

The group will report the findings of the review at its annual results on June 11.

In morning trading, shares rose 6.6% to 18.55p. 

Quiz’s reliance on Debenhams and House of Fraser has proved disastrous, says analyst

‘‘FY2018/19 has been a troublesome year for fashion retailer Quiz – with two profit warnings and a poor H2, including a particularly dire first two months of 2019 with shoppers all but abandoning ‘going out’ purchases," said Kate Ormrod, lead retail analyst at data and analytics firm GlobalData.

"Its three channels have achieved full-year growth, with group sales reaching £130.9m, up £14.5m on the year, but prevailing challenges for its domestic stores and concessions business in particular pose a serious threat.

"Quiz’s reliance on weak department store retailers Debenhams and House of Fraser has proved disastrous and remains a warning for other players adopting a concession model."

Ormrod said Quiz has to fight back given the relentless discounting cycle of its online-only rivals, such as ASOS PLC (LON:ASC) and Boohoo PLC (LON:BOO).

The company needs to focus on strengthening its product ranges, ensuring they are compelling and that it can justify its midmarket positioning, she said.

"Further differentiation is required to stand out in the crowded market, especially as shoppers will likely focus on product rather than brand when browsing the third-party sites Quiz sells through," she added. 

"Recent diversification into swimwear, tapping into the Love Island-inspired demand for more glamorous and daring styles, is expected to be fruitful; however the retailer’s venture into menswear, which launched a year ago, has not made a big splash despite the growth potential in the category."

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