SCOTTISH fashion chain Quiz has warned that the cost of living crisis is weighing heavy on shopper confidence just as sales return in the wake of the pandemic.
The news came as the Glasgow-based firm reported soaring store and concession sales, with an increase of 48.2 per cent to £24.6 million, in its first-half results. The firm was boosted by the return of shoppers to UK high street after pandemic restrictions were lifted.
However, some of the shine has been taken off the bounce-back by "inflationary pressures". The group said while sales surged by a “marginally” better-than-expected 37.2% to £49.4m over the six months to September 30, revenue growth has eased over the past two months.
Quiz said it was a “trend consistent with other fashion retail businesses as inflationary pressures began to impact consumer confidence”.
It said like-for-like sales were consistently higher than before the pandemic across its 62 shops and 62 concessions.
The company was earlier said to have been “vindicated” by one analyst after an overhaul of the business two years go in which Quiz made the strategic decision to "retain a physical store estate, but of reduced size and on very different terms”.
READ MORE: Glasgow Quiz Clothing 'vindicated' in new results
The firm shed 93 jobs with the closure of 11 stores as part of a restructure move to offload loss-making outlets and reduce its rent bill at the time.
The company said by taking the action then it meant 822 of the 915 staff connected to the property arm could remain with the group.
The retailer moved to buy back stock and some of the assets from the Kast division, which operated 82 Quiz leasehold retail stores across the UK and Ireland, on the same day it placed it in administration, for £1.3m.
Online sales rose by almost a third, up 28.8% to £16.1m, though the group said efforts to boost shopper basket values had been partly offset by a rise in clothes sent back.
International revenues from store and concessions operated by the group amounted to £3.4m, twice the 2021 figure of £1.7m.
It had six international stores and 15 international concessions, all in Ireland, as of the end of September, against five stores and 15 concessions, the year before.
READ MORE: Quiz to return to profit as demand picks up for party clothing
Quiz said that “consistent with the other revenue channels, the group continues to pursue opportunities for long-term, profitable international growth and is confident that this can be achieved”.
The group also hailed a rise in profitability over the first because of stronger demand for full-price items, while it also said it had been able to recover rising costs as inflation pressures ramped up.
Quiz kept its full-year guidance unchanged, but said it will be dependent on the crucial Christmas season, and noted the uncertainty over the outlook for broader confidence.
The company said in an update to the London Stock Exchange that it had total liquidity headroom of £12.7m, including a cash balance of £9.2m and £3.5m, against £6.5m in total six months ago.
It said: “Whilst it remains uncertain what impact the current cost of living pressures will have on consumers’ disposable income and on their demand for Quiz products over the remainder of the group’s financial year, management remain confident that the product proposition and commitment to providing glamorous looks at value prices will continue to appeal.
“The board is pleased with the strong growth recorded across all channels during the period which supports the group’s omni-channel business model.
“It remains confident that the brand will continue to increase its appeal and looks forward to achieving continued profitable revenue growth.”
Quiz said: “The group’s revenue growth in the period benefited from demand recovering further to the removal of coronavirus related social restrictions.
“The group’s year on year revenue growth rate moderated as the period progressed during August and September, a trend consistent with other fashion retail businesses as inflationary pressures began to impact consumer confidence.”
Matthew Webb, analyst at Panmure Gordon, said: “Quiz has traded well in fiscal H1, with revenue up 37% and gross margin ahead of the comparable period. It has also seen a significant improvement in its financial headroom.
“Although trading conditions are clearly becoming more challenging, we make no changes to our FY23 forecasts.
"Revenue growth slowed to 15% in fiscal Q2, versus the 62% achieved in Q1. This was partly due to the comps normalising, as the impact of Covid abated during the summer of 2021."
Mr Webb said that “the strongest revenue growth in fiscal H1 came from the UK stores and concessions at 48.2%”.
Shares in Quiz closed at 10.38p, down 9.98%, or 1.15p.
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