Quiz still soaring, international and online are huge opportunities
Quiz Clothing could afford to feel at least a little smug on Wednesday as the fast-growing, fast-fashion retailer turned in yet another set of stellar results that reflected “strong growth across all channels as the Quiz brand gains momentum”.
While the six months to September 30 was tough for some in UK fashion, for Quiz it was a triumphal march. But first, some even more important news. We all know how difficult October and November has been for the fashion sector, so how has Quiz fared?
Very well, it seems. The company has seen “continued strong current trading with underlying group revenue in the seven weeks to 18 November 2017 up 32.9% year on year.” Phew!
So back with that strong H1 performance, let’s look at the figures. Group revenue rose 35.2% to £56.1 million. And underlying profit (ebitda) rose 32.1% to £6.2 million, while underlying pre-tax profit was up 31% to £4.8 million.
And while pre-tax profit on an underlying basis was flat at £3.7 million, that was because large costs were linked to the firm’s recent stock market listing and heavy investment in expansion. But another key metric, net cash at the end of the first half, soared, rising from £0.4 million to £11.5 million. That’s crucial because we’ve already seen elsewhere this year that a cash crunch can be a major problem for otherwise-healthy businesses.
ON THE RIGHT TRACK
Cash crunch is certainly not a phrase we’ll be associating with Quiz any time soon but what exactly is this company doing right that others in the UK fashion sector aren’t?
Well, it’s clearly getting the online offer right as its e-sales rose 204.6% to £13.8 million in the period. Website traffic continued to grow reflecting its “increased and effective marketing investment” and was up 61.5% year-on-year, primarily driven by mobile. Sales though its own website increased by 122% (which includes in-store sales associate iPad sales where stock issn’t available in the physical store). It also saw “strong growth” in sales made through third-party websites, which includes the benefit of starting sales on the Next site a year ago and through Zalando in May.
Of the £13.8m of online sales in H1, £1.1m was generated from international markets and the launch of the US website befog the end of this financial year should add a further boost.
It’s making an impact with international physical stores too as sales outside of its domestic market rose 26.1% to £10 million. The company opened its firs non-UK stores as it debuted with three Spanish locations.
UK stores and concessions also progressed with a 15.2% sales rise to £32.3 million. It added five new stores and seven new concessions in Britain during the period.
Founder and CEO Tarak Ramzan was relatively restrained in delivering the results, calling them “very good”. The exec added that the firm “enters the important Christmas trading period with good momentum.”
And it has the resources to maintain that momentum having raised sufficient cash from its IPO last July. Its plan is to make the most of new ranges (like its Curve and Bridal launches that “have driven the increased sales in the period”), to maintain margins and to grow in areas where it sees major opportunities such as online and abroad.
So did Wednesday’s report include any bad news? Not really. OK, the final profits figure was dented by that IPO spend and other investment. And the gross margin dipped ever-so-slightly to 63.5% from 63.6%. But the company has mitigated pressures on costs through a combination of “efficient sourcing as well as providing a wider range of prices for customers to ensure that they can obtain product at their preferred price point.”
There were no signs here that Quiz’s growth is set to slow down. It will slow at some point, of course, but with the firm still to exploit the massive international opportunity and still having a relatively small physical stores base at home, any slowdown is unlikely to happen soon.
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