Shares in fast-fashion chain Quiz surge by over 40% after group reveals it’s on track to make first profit since 2019
- Quiz shares registered the largest rise on the AIM All-Shares Index on Friday
- The firm believes full-year revenue will exceed expectations to around £78m
- Partywear sales were significantly hurt in 2020 and 2021 by lockdown rules
Clothing retailer Quiz saw its share price skyrocket today after it upgraded its full-year forecasts to profitability for the first time in three years.
Quiz shares had climbed by 44.2 per cent to 15.5p on late Friday afternoon, making it the largest riser on AIM All-Shares Index by some distance – though they remain a long way beneath their peak.
In its latest trading update, the fast-fashion chain revealed that the strong trading levels it witnessed over the Christmas period continued across its website, shops, and concessions into the first three months of 2022.
Partywear: Quiz has boosted its profit forecast following an improvement in gross margin caused by the group’s decision to sell more occasionwear and dressy casualwear at full price
This helped boost its like-for-like revenues to levels ‘broadly consistent’ with what the company generated prior to the Covid-19 pandemic.
As a result, the Glasgow-based business is now predicting that overall revenues will jump ahead of expectations to around £78million.
It also estimates earning an annual pre-tax profit of at least £500,000, which would be its first profit since 2019, after posting losses of £3million and £10million, respectively, in the previous two years.
Quiz attributed its earnings upgrade to an improvement in gross margin caused by the group’s decision to sell more occasionwear and dressy casualwear at full price as the popularity of foreign holidays and weddings recovered.
Sales of partywear were significantly depressed for much of the last two years by lockdown restrictions limiting the size of wedding ceremonies and gatherings of Britons living in different houses.
Demand rebounded significantly when these laws were relaxed, with revenue in the first half of the financial year and the two succeeding months more than doubling on the equivalent period in 2020.
Guidance: Glasgow-based Quiz estimates earning an annual pre-tax profit of at least £500,000 and revenues of around £78million for the 2022 financial year
Yet as the group reported in early January, its trade took a hit over the festive period from the end of certain third-party partnerships, which caused online revenues to plummet by 25 per cent in December.
Orders were also badly affected that month by the emergence of the Omicron variant of coronavirus and the UK Government’s subsequent introduction of ‘Plan B’ restrictions.
More Quiz customers returned their purchases to the firm’s stores as many businesses cancelled their office Christmas parties, new rules on entering large public venues were enacted, and Britons were advised to work from home.
Nonetheless, the retailer saw its revenue climb by 20 per cent to £8.8million in December, and sales have continued to grow even as other problems like soaring energy prices have arisen.
‘Encouraged by the positive performance delivered during the year, which highlights the strength and awareness of the Quiz brand and the growing customer demand for its trademark dressy and occasionwear offering, the board is confident in the group’s continued profitable revenue growth,’ the company remarked.
Founded in 1993 by Tarak Ramzan, Quiz has become known in recent years for its collaborations with major reality television stars from shows such as Love Island, The Only Way is Essex, and Geordie Shore.
It debuted on the London Stock Exchange in 2017, raising more than £100million from its initial public offering, but its share price started tanking the year afterwards when it issued the first of a series of profit warnings.