Quiz e-tail surges, Debenhams concessions continue
After a profit warning in March, on Thursday omnichannel retailer issued a trading update for the year to March 31 and while it reported sales rises that some companies might envy, it was short of what the company had expected prior to the last few very difficult months.
But its shares rose as much as 9% in early trading, suggesting that investors thought all of the bad news was out of the way, or perhaps simply their relief that the company’s substantial Debenhams concession business is continuing following that retailer’s restructuring dramas.
So what did Quiz have to say on Thursday? Group revenue increased by 12% to £130.9 million during the year and the firm continues to expect group EBITDA to be around £4.5 million for FY 2019, as it had said in its profit warning early last month. The sales rise was driven by e-tail strength as online sales rose as much as 34% to £41 million in the year. International physical store sales rose 8% to £23 million but UK physical store sales were up only 4% to £66.9 million.
The company gave no update on sales in the last few weeks, which is shame as the profit warning had been due to tough trading during January and February.
Back with the figures we do have, the online surge was made up of the firm’s own websites, as well as a number of third-party websites, and revenue form the former increased by a stunning 58% during the year, “reflecting the impact of the increased marketing spend undertaken.” Online now accounts for 31.3% of sales, up from only 13.3% two years ago.
The company also said that its strong international sales reflected “continued growth from our franchise business and the impact of opening three standalone stores in Spain during the previous year.”
Its UK standalone stores and concessions revenue benefited from the opening of three new standalones and the relocation of two stores into larger refurbished units during the year.
And what about Debenhams? Well, fears over the department store in recent weeks had clearly hurt the Quiz share price as the company has huge exposure to Debenhams. Revenue from Quiz’s 108 concessions in UK and Ireland Debenhams stores made up 23% of its total turnover last year so news that the department store operator will survive is clearly a boost for Quiz, even though we don’t yet know how its store closure plans will affect it. “We look forward to continuing to work productively with Debenhams going forward,” was all the company said in this announcement.
We didn’t get an update on the company’s previously announced “thorough review of all aspects of the business with a view to mitigating the effects of slower than anticipated growth during the year.” It looks like we’ll have to wait until the final results announcement on June 11 for that.
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