Fashion retailer Quiz has launched a strategic review after falling into the red in the first half amid challenging sector conditions.
Glasgow-based Quiz made a £1.5 million loss before tax in the six months to September 30, compared with a profit of £1.8m last time.
First half sales fell around 15%, £7.1m, to £42.3m from £49.4m.
The company said the fall reflected the impact of inflation on consumer spending. The pressure has been maintained in recent weeks in the early stage of the key Christmas and New Year trading period.
Sales in the two months to November 30, including Black Friday, fell 11%, to £14.2m, from £16m last time.
Chief executive Tarak Ramzan said: "This has been a challenging period for many retailers, and we have not been immune to the widely publicised macro headwinds impacting consumer demand.”
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With the outlook for consumer spending uncertain, Quiz is braced for conditions to remain tough.
Mr Ramzan cautioned: “The Board currently anticipates that full year revenues will be approximately 6-8% lower than current market expectations.
“As a Result, the Board anticipates reporting a loss before taxation for the year materially larger than previous expectations.”
Directors are confident that Quiz’s multi-channel operating strategy, which involves selling through physical stores and online outlets, makes sense.
Mr Ramzan said; “Longer term, the Board remains confident that underpinned by the strength and distinctiveness of the QUIZ brand and the relevance of the Group's omni-channel business model, QUIZ can deliver long-term, sustainable and profitable growth for all stakeholders.”
However, the company said that given the group’s recent trading performance, the Board has decided to immediately initiate a thorough review of the strategic options available to maximise shareholder value.
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Mr Ramzan said he remained confident that Quiz remains a strong, distinctive brand known for providing glamorous looks at good value prices but directors thought it was prudent to examine a range of options.
The review will be led by Quiz’s chairman Peter Cowgill. He was executive chairman of the JD Sports retail business from 2004 to 2022.
Quiz expects the findings of the review to be announced in the first quarter of 2024.
The launch of the review comes 30 years after Mr Ramzan opened the first Quiz outlet in Glasgow in 1993.
Mr Ramzan launched Quiz after inheriting his father’s manufacturing firm as a young man.
The company did not give any indication of what options would be considered as part of the review.
Directors could decide to seek a buyer for the group or parts of it. They may decide to increase the company’s focus on a particular channel.
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In the latest year Quiz has shown faith in the potential of bricks and mortar stores by opening three new UK branches, although it closed one in Ayr. It had 64 UK stores on September 30, compared with 62 at the same point last year.
It has opened a new store in Liverpool since the period end.
The company said it continued to benefit from reduced rental charges across the store portfolio further to the restructuring it completed in 2020 as the pandemic posed challenges for retailers. Eleven Quiz stores closed in that year including one in Kirkcaldy.
Quiz sold through 60 concessions in the UK on September 30.
It operated five stores in the Republic of Ireland and 21 concessions. The group has international franchise partners.
Sales through UK stores and concessions fell 10.6% in the first half, to £22m from £24.6m.
Online sales fell by 21.7%, to £12.6m, from £16.1m.
International sales fell 11.5% to £7.7m, from £8.7m.
Shares in Quiz closed down 14%, 0.95p, at 6.03p on the Aim market. That left the firm with a market capitalisation of less than £10m.
The shares sold for 17.5p in December last year.
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