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Stock Watch: QUIZ, OnTheMarket and YouGov

Emma-Lou Montgomery

Emma-Lou Montgomery - Fidelity Personal Investing

Is QUIZ (QUIZ) the next Forever 21? That’s the question investors will want to know when the fast-fashion retailer gives a trading update on Friday. Forever 21, a pioneer of fast fashion, filed for bankruptcy at the end of September, citing intense competition and the high cost of its own global ambition.

Back at the full-year stage QUIZ revealed a 97% drop in its own annual profits, blaming not entirely dissimilar heavy discounting and investment spending for the negative impact on its margins.

At the start of last month, it reported that sales had continued to fall over the summer period and that revenue for the year to date was broadly flat. While it tried to put its own failings into context with the wider fashion retail sector - which has been undoubtedly struggling - it would have failed to muster much sympathy when rival Boohoo posted a nothing-short-of-spectacular first-half that managed to beat even the most optimistic of forecasts.

QUIZ chief executive Tarak Ramzan has tried to soothe investors’ worries, saying the company is attempting to navigate “what remains a volatile trading environment” and that it has a “sharpened focus and a clearer vision” of what is required to ensure it succeeds. But that doesn’t answer the one burning question, which is why isn’t QUIZ more like Boohoo?

You can bet investors will want an answer. A year ago the shares were trading at 154p; today they are less than 17p. It also took the decision to suspend its dividend payout last year. It’s a bad situation that this particular fast-fashion retailer needs to address quickly.

Now not all companies operate in sectors where their ability to sink or swim rests largely in their own hands. Estate agency Savills has already revealed that the smallest number of homes changed hands in the first half of 2019 in a decade. Meanwhile, the inflation-adjusted average UK house price has not risen since 2016 and is still well below its 2007 peak.

For AIM-listed property portal operator OnTheMarket (OTMP), the Brexit-effect that has hit the property sector is something that it and everyone else is having to take a sit and wait approach to.

As a result, the firm now forecasts revenue will come in between £18 million and £18.5 million for the year to 31 January 2020. But that is anticipated to rise to between £27 million and £29 million the year after. That’s a cut to both this year’s revenue growth target and the next, with sales and lettings volumes both down.

OnTheMarket which is due to post half-year results on Thursday, said on the plus-side, tight cost control should mean that losses will be in the region of £9 million to £10 million for this financial year, which is a small improvement on previous guidance. But the firm's target of making a profit has now been pushed back 12 months to January 2022.

The recently-signed deal with housebuilder Barratt Developments, which will see it list Barratt Homes, David Wilson Homes and Barratt London on the site, gave a boost to OnTheMarket’s shares. It was a deal which is the first of its kind for OnTheMarket and saw the company’s shares jump by 7%.

The shares are however, still almost 50% lower than they were when the company came to market in 2018. And, by the sound of it, that will just be more bad news for the UK’s already-squeezed estate agents who still own around 70% of the equity, according to the company. Many of the estate agents who helped establish the site in 2015 - as an alternative to the likes of Rightmove and its hefty listing fees - are still shareholders.

Having floated at 165p, OnTheMarket’s shares are currently trading around 87.5p.

One surprise company that’s benefitting from Brexit, possibly more than any other is YouGov (YOU). The market research and data analytics firm, whose polling data was spectacularly inaccurate when it came to the outcome of the EU referendum, has - somewhat ironically - seen its share price soar since then.

Shares in the group have more than tripled in the past three years, making it one of the best-performing stocks on the AIM market.

Behind this notable performance has been a shift in its business model, away from bespoke surveys and into a self-styled technology group.

Over the next five years it has ambitious plans to double revenue and operating profit margins. And is even toying with a move away from London’s junior market into US stock exchange such as the tech-heavy Nasdaq. 

Gone is the focus on those exit polls - which now account for less than 5% of revenue - and instead YouGov appears to have morphed into a slick software and database company whose largest client base now lies in Silicon Valley where it’s known as a tech platform for marketing data”, according to chief executive Stephan Shakespeare.

Looks like YouGov might very well have had the good sense to exit British politics at just the right time. We’ll find out more when it releases full year results on Tuesday.

Important information The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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