Quiz plan to axe 20 concessions not enough say analysts, slicker webstore is needed
today Jun 13, 2019
An analyst this week has cast doubt on the measures that under-pressure fashion retailer Quiz is taking to address some of its problems and get back to the dynamic growth it used to enjoy. The company is planning to axe 20 department store concessions but that strategy was said to be “insufficient”.
Pippa Stephens, retail analysts at GlobalData, said that ‘‘FY2018/19 has been a troublesome year for Quiz – with three profit warnings and a poor H2, including a particularly dire first two months of 2019 with shoppers all but abandoning ‘going-out’ purchases resulting in heavy discounting of excess stock.”
That rejection of such going-out buys is key as Quiz is very much about occasion dressing.
But its issues are deeper than just a move away from ‘dressing up’ and Stephens said that its “reliance on weak department store retailers Debenhams and House of Fraser has proved disastrous and remains a warning for other players adopting a concession model.”
At the end of its financial year, the company operated 168 concessions across the UK and has now announced plans to cut this by 20 during this year. But Stephens said she thinks the number being cut is too small “to fully mitigate the risks posed” and she added that “Quiz’s strategy to open more standalone stores within higher footfall areas should be approached with caution, as UK physical clothing spend is expected to decline up until 2022.”
The company’s profit on an EBITDA basis for FY2018/19 reached just £4.2m, hurt by a £0.4m bad debt linked to the House of Fraser administration. It was almost half that previously predicted in January and down from the £11.5 million the company was forecasting as recently as last October.
Stephens added that “Quiz has to fight back – but not by following the same path and devaluing its offer. The focus therefore lies in strengthening its product ranges, ensuring they are compelling and that it can justify its mid-market positioning and drive loyalty.”
She believes one way forward is to focus on digital as the firm’s e-sales now make up 31.4% of its total, up from 13.3% only two years ago. Stephens said “the site could however be slicker and more visually appealing. Despite cutting ties with two of its third-party website partners, this channel still provides a huge growth opportunity for Quiz, and so further differentiation is required to stand out in the crowded market, as shoppers will likely focus on product rather than brand when browsing these sites.”
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