As Ted Baker shares plunge...
Quiz reviews stores and halts payout as profits plunge
Love Island’s Gabby Allen has modelled the Quiz range
Fashion chain Quiz Clothing has announced it will pull out of some concessions and suspend its dividend after suffering a slump in annual profits.
It is terminating some third party online contracts and reviewing stores as leases come up for renewal.
The company said group revenue of £130.9 million was 12% higher (2018: £116.4m. However, profit before tax fell to £600,000 (FY 2018: £9.6 million). Profit before tax reflecting non-underlying costs was £200,000 (2018: £8.5 million).
In view of the trading position, chairman Peter Cowgill said: “it is appropriate to suspend dividend payments in order to restore profitability and support the growth of the business. As a result, the board does not recommend the payment of a final dividend.”
In his statement, he added: “The retail environment in the UK is continuing to experience an unprecedented pace of change with a combination of consumers continuing to spend more online and lower high-street footfall creating structural challenges for retailers across the UK high street.
“At the same time, the UK consumer has faced – and continues to face – extreme levels of macro-economic and political uncertainty which is impacting on consumer confidence.
“We firmly believe that the Quiz brand continues to have strong customer appeal and that the group’s omni-channel business model remains relevant and key to our long-term success.
“The foremost priority for the group is to restore profitability. Going forward, a major focus will be on stabilising the UK’s trading performance in what will remain – during the foreseeable future at least – a difficult and dynamic retail environment.”
Ted Baker warning
Ted Baker shares lost more than a quarter of their value on Tuesday after the fashion retailer warned that an “extremely difficult” start to 2019 would see underlying profit for the year fall short of analysts’ estimates.
New chief executive Lindsay Page said: “The markets that we trade in have been extremely challenging and that has also led to levels of discounting I think we’ve rarely seen before, particularly in the UK.”
The board expects underlying profit before tax for the year to January 2020 of £50 million to £60m, compared with a company compiled consensus of £70.9m and last year’s £63m.
Page, who replaced founder Ray Kelvin following the “hugging” controversy, added: “I think it’s a combination of weathering the storm… but also looking at some opportunities that arise from these very difficult times.”
Peel Hunt analysts said: “The scale of today’s profit warning at Ted Baker will raise eyebrows… there will be questions around founder Ray Kelvin’s departure and the wider question of how to get Ted back on point.”
Green showdown (update 12 June)
Landlords and other creditors will meet on Wednesday to vote on revised proposals to save Sir Philip Green’s Arcadia retail empire whose brands include Topshop, Miss Selfridge, Burton, Dorothy Perkins, Evans and Wallis.
A vote on Sir Philip’s proposals was postponed last week after some landlords, including shopping centre owner Intu, refused to back it. It is thought Intu will again reject it.
In May, Arcadia announced that it was in serious trouble, facing “significant liquidity issues”. It is struggling to pay fixed charges of £100m a year, with earnings in 2019 expected to be only £30m, down from £219m two years ago.
In order to save the business, Sir Philip has proposed implementing a Company Voluntary Arrangement (CVA), which is a renegotiation of terms with a company’s creditors as part of an insolvency procedure.
However, creditors must approve not one, but seven different CVAs, in order for the business to survive, as Arcadia’s companies are interlinked.
Jane Sydenham, investment director at Rathbone Investment Management, said: “Anything that helps the terms for the landlords is going to be slightly better, but this is a turning point for the commercial property sector, because we’ve had decades of upward only rent reviews, and obviously now with the shift to sales online, this really is a test for where the new level for rents sits.”