The Only Way Is QUIZ

Daniel Lane

Daniel Lane - Fidelity Personal Investing

Group revenues at QUIZ jumped 19% to £66.7m in the six months to September, with online sales now making up 30% of the fast fashion house’s overall takings.

This morning’s interim results come hot on the heels of a less than rosy period for the retail firm, as it saw its 11 House of Fraser concessions suffer under the department store’s collapse. The relative market newcomer had to pay £0.4m in charges related to House of Fraser’s entry into administration in August and saw a drop in store footfall in September as a result.

A subsequent profit warning hit shares hard at the beginning of October but today’s update shows the AIM-listed retailer is making good headway in its ecommerce division despite tough competition in the space. Investors will be watching to see whether the firm can stimulate further sales in its third-party online partners and, judging by the flat share price this morning, they might need to see better second half results before dipping their toes in again.

QUIZ differs from the likes of ASOS and boohoo in that it maintains a balance between its stores, concessions and online proposition, rather than solely focusing on attracting Gen Z fashion fans to its site. The question here among many market watchers is whether this is the best way to reach its audience.

Online revenues increased 44% to £20m during the period, representing 30% of Group sales, with stores and concessions only rising 9% to £35.1m. Physical outlets might still take the lion’s share of revenues for the time being but, given the difficulties around burdensome real estate that has characterised the retail sector this year, it’s likely online sales will dominate in the not too distant future. In fact, sales through QUIZ’s own website increased by 70% thanks in part to greater brand awareness brought about by its latest collaboration with The Only Way is Essex.

Young fans of the show can now buy their favourite cast members’ outfits and will see new product lines plastered over Instagram through paid posts, and advertisements across TV and the London Underground.

This side of the business looks very similar to the likes of boohoo, Pretty Little Thing, Nasty Gal and most of the other fast fashion brands but QUIZ is adamant in its pursuit of a strong physical retail footprint as well.

This morning the company reiterated its intentions, saying: “The concession model remains very flexible and attractive with limited capital expenditure required. Our most recent concessions which have been opened for more than a year have, on average, achieved the Group's targeted payback period of 12 months or less.

“We continue to strengthen our store estate and concession portfolio and opened two new standalone stores in Bluewater and Oxford as well as thirteen new concessions with existing partners during the period.”

That brings the current count to 70 stores and 160 UK concessions. If this year has shown investors in the sector anything it is that success in this side of the business will be determined, in large part, by a meticulous attention to making the most of physical assets and avoiding overexpansion.

If set-up costs are minimal and easily recoverable, and overheads remain low by using third-party staff to sell QUIZ products, the plan could be a winner. And if concessions in particular can match online activity growth, QUIZ could become the hybrid model to follow.

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