Fashion firm Quiz issues second profit warning
Fast-growing fashion retailer Quiz has made its second profit warning in three months.
It now expects to make £8.2m, down from an estimate of £11.5m made in October. Quiz targets 16 to 35-year-old "fashion forward females". Last year it launched a new collection with Love Island finalist, Gabby Allen. Glasgow-based Quiz was founded in 1993 and has 70 stores and 148 concessions across the UK, as well as dozens of franchises overseas. It has outlets in the Republic of Ireland, Saudi Arabia, Malaysia, Singapore, United Arab Emirates, Cyprus, Egypt, Georgia and Pakistan. After the announcement its shares slumped by 33% in London trading. The profit warning comes despite reports that its revenues are growing. The group said that Christmas trading - between 25 November 2018 and 5 January - saw revenues rise 8.4%. The group's online revenue jumped by 34.1% during the period. Founder and chief executive Mr Ramzan said: "Against the backdrop of challenging trading conditions over recent months, Quiz has delivered further revenue growth over the Christmas period driven by the performance of our own websites. " But he said the growth and the margin achieved had "been below our initial expectations". Gross margins in the six months to 31 March 2019 are now expected to be around 60.5%, down from 62% in the six months to 30 September. 'Discounting killing retailers' Neil Wilson, analyst at Markets.com, said: "Quiz became the latest High Street casualty as its shares plummeted on a profits warning. Overall performance isn't bad at all - sales rose more than 8.4%, led by a 34.1% jump in online revenues. High Street sales held up ok, rising 1.6%. "But we got a bad profits warning. It looks like discounting is really killing retailers. "There is just no way they can pass on higher costs by raising prices. Consumers are simply not prepared to pay more. The discounting vicious circle means shoppers are now expecting big price reductions. Margins at Quiz are like others coming under a lot of pressure from heavy discounting." The group attracted more than £100m from investors when it floated on the London Stock Exchange's junior Aim market in July 2018. It set aside more than £10m of that to help fund further expansion.