Fashion chain Quiz issues profit warning after slow Christmas

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Retail industry Fashion chain Quiz issues profit warning after slow Christmas

Womenswear retailer blames discounting for second profit downgrade in three months

A Quiz store at the Silverburn centre near Glasgow. Photograph: Quiz

Quiz has issued its second profit warning in just over three months, as the womenswear retailer’s woes continue following a weaker than expected Christmas.

The company said heavy discounting meant its main measure of profits for the 2019 financial year would be £8.2m, 29% lower than the £11.5m it expected when it cut its forecasts in October.

Revenues for the full year to 31 March 2019 will be also be lower than current market expectations, at £133m, down from forecasts of £138m, Quiz said.

Shares slumped by more than 24% on Friday to 27p. The share price has now fallen by more than 80% since July, when it hit a high of 205p.

Quiz’s profit downgrade comes amid a challenging time for the British retail industry, which is struggling with weaker demand from consumers, prompted in part by Brexit uncertainty, as well as rising costs and intense competition.

Retailers in 2018 endured their worst Christmas since the financial crisis, with British Retail Consortium figures showing that total sales growth dropped to zero in December for the first time since 2008, with all areas of the high street hit by a fall in sales except food.

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Quiz raised more than £100m when it listed in July 2017 – giving £92.1m to its shareholders – but has since struggled to grow sales fast enough.

The retailer said its total revenue increased by 8.4% in the six weeks to 5 January, with online sales up by 34.1%. However, it significantly increased its staff and marketing costs in recent months, weighing on profits.

Tarak Ramzan, Quiz’s chief executive, said the company had faced a “backdrop of challenging trading conditions over recent months”.

Ramzan said: “Quiz has delivered further revenue growth over the Christmas period driven by the performance of our own websites. However, the growth and the margin achieved have been below our initial expectations and, consequently, the board considers it appropriate to revise its sales and profit expectations for the current year.

Ramzan, the founder of Quiz in the early 1990s, added he was “confident about Quiz’s long-term potential”.

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