Cost cuts and online sales help clothing chain build confidence
The FASHION Quiz brand said its sales are improving and remains confident in the future of the group as it reports increasing losses and confirms a 66% drop in annual revenue to 39.7 million pounds sterling.
“The past 18 months have been truly unprecedented and presented challenges for the company that would not have seemed credible before,” CEO and Founder Tarak Ramzan said in the company’s final results for the year. as of March 31, 2021.
The Glasgow-based formal wear company with 17 stores in Scotland reported underlying pre-tax losses of £ 9.6million, up from £ 3.1million the previous year .
Peter Cowgill, the company’s non-executive chairman, said lifting restrictions on social events and gatherings was fueling growing demand for Quiz staples.
He added that this resulted in a return “to the revenue generated before the pandemic” on a comparable basis, that is, before the impact of one-off events such as store openings or closings was taken into account. account.
In the five months between the end of the year on March 31 and August 31, the group said it had a turnover of £ 30.6million. This is £ 17.4million more than the revenue generated during the same period in 2020.
“This was driven by the performance of our own website and our more flexible and economically viable store portfolio,” said Mr. Cowgill.
After the first Covid-19 lockdown last March, Quiz restructured its store portfolio to be more “economically viable”. Sixty-six of the 82 stores previously operated by the group have now reopened, with more flexible rental terms and an average rental period of 24 months.
This will give Quiz more “flexibility going forward,” the company said.
Quiz has also significantly reduced the number of in-store concessions it operates in other workshops. It reduced them from 156 to 119 during the year, and has since closed 74 more, leaving 45 dealerships in operation. The drop “reflects the closure of dealerships that were generating little return or operating at a loss,” Quiz said. It also reflects the closure of two chain stores – Debenhams and Outfit.
Going forward, Quiz said it would depend less on third parties like dealerships and generate more revenue from its own stores and websites, “which have traditionally generated higher returns than other revenue streams.”
Online sales offer “significant long-term growth potential for the group,” said Ramzan. For the whole of 2021, online sales represented 55% of the group’s turnover, against 32% in 2020.
International sales – which account for 19% of Quiz’s revenue – also offer the potential for “low risk, low cost” expansion through routes such as online and in-store concessions.
The company said its “decisive actions” in response to Covid had reduced underlying operating costs by 47%.
“We have sought to manage and reduce costs as much as possible,” said Ramzan. “Substantial cost savings have come from renegotiating rental agreements for stores, downsizing at head office and throughout the company, and reducing marketing expenses when demand for clothing from ceremony had diminished considerably. ”
The number of employees across the group has grown from an average number of monthly employees of around 1,700 in 2020 to around 1,500 in 2021. Quiz has 350 employees in Scotland.
Mr. Ramzan said he was grateful for the “talent, professionalism and dedication” of his colleagues and said the development of the Quiz brand remained the group’s long-term strategy.
The final results show directors’ compensation – pay and awards – of £ 624,000 – compared to £ 675,000 in 2020.
As of September 28, 2021, the company said it had cash in the bank of £ 6.2million – not including a bank loan of £ 3.8million – and unused bank facilities of £ 2.4million. sterling.
“With the recovery in revenues recorded to date, the group expects to generate positive cash flow from operating activities during the fiscal year ended March 31, 2022,” the company said.