- Full year 2023 pre-tax profit ‘at least in line’ with forecasts
- But retailer issues downbeat demand outlook
- Flags difficult February and March
Shares in Quiz (QUIZ:AIM) slumped the best part of 20% to 12.5p after the occasion wear and dressy casual wear seller warned the ‘significant pressures’ on consumer spending seen in recent months are expected to persist into the new financial year and reported lower like-for-like sales in the past two months.
Outlook caution overshadowed an otherwise encouraging update from the Glasgow-based fashion brand, which guided to pre-tax profit for the year to March 2023 of ‘no less than £2 million’, up from £800,000 in 2022.
While Quiz warned ‘external headwinds’ may impact consumer demand across the retail sector over the coming months, reducing its visibility for the year to March 2024, management remains ‘highly confident that the strength of the QUIZ brand and the group’s model provide a solid basis for future growth’.
RETAIL STORE RECOVERY
Quiz’s sales grew by 17% to £91.7 million in the year to March, driven by 23% growth from its UK stores and concessions to £45.5 million and 12% and 10% growth from the online and international channels to £29.8 million and £16.4 million respectively.
While sales were lifted in the early months of the financial year by a strong recovery in demand for Quiz’s products following the removal of Covid-related restrictions, year-on-year growth subsequently slowed as inflationary pressures began to dent consumer confidence.
Disappointingly, like-for-like sales in February and March 2023 were lower than the previous year with Quiz seeing delayed purchases as shoppers began to feel the inflationary pinch.
Casual wear was bought more than Quiz’s signature dressy fashion and the company also lapped tough prior year comparatives.
WHAT DID THE CEO SAY?
CEO Tarak Ramzan said Quiz delivered ‘a good performance in full year 2023 achieving revenue growth across each of its channels reflecting the strength of Quiz’s trademark dressy and occasion wear product offering.
‘This outcome, which was achieved despite the challenging market backdrop in recent months, is a strong testament to our flexible model and differentiated brand.’
THE PANMURE GORDON VIEW
Following the update, Panmure Gordon’s Tony Shiret reduced his price target from 20p to 15.5p and cut his year to March 2024 pre-tax profit forecast from £3.9 million to £2.8 million.
The analyst believes that result ‘would still represent decent progress given the uncertainties of the current year and the difficult conditions currently being faced’.
Shiret explained: ‘Quiz is a very operationally geared company and as with other clothing retailers its trade is weather-related. So it is possible that our original forecast could be achieved.
‘Longer term the task and opportunity investment-wise is for the company to demonstrate it can achieve mid-high single digit margins.’
