LONDON (Reuters) - Fast fashion retailer QUIZ Plc said its online sales fell almost 15% over Christmas, making it one of the worst performers in the British retail sector and sending its shares down as much as 10%.
The 27-year-old company, which trades online, in stores, through concessions and via third party sites, said its sales had weakened in the run up to Christmas after a successful Black Friday at the end of November.
“While the trading backdrop remains challenging, it is disappointing to report a decline in revenues in the period,” QUIZ Chief Executive Tarak Ramzan said.
Many of Britain’s clothing retailers struggled over the Christmas period with Superdry and Joules issuing profit warnings last week.
But online fashion retailer Boohoo, which targets a similar consumer demographic as QUIZ, reported robust sales, with its market cap overtaking that of 136-year-old M&S for the first time.
QUIZ shares fell 10% in early trading to 17 pence a share, giving it a market cap of just 21 million pounds. It listed on the stock market in July 2017 and its shares hit a high of 205 pence.
The Scottish based group said revenue from online sales via QUIZ’s own website grew but sales from third-party websites declined significantly, partly due to a move to cut a number of unprofitable partnerships with third-party online sellers.
Online sales as a whole fell 14.8% and total revenue fell by 9.3%. A drive to cut costs will help to protect profitability, QUIZ said. The retailer is also holding less stock than last year.
QUIZ, which employs more than 1,500 people in the UK and Ireland alone, said it had engaged in less promotional activity, or sales, on its own site than the previous year, returning to selling at full price between Black Friday and Christmas.
Matthew Webb, an analyst at Panmure Gordon, said the reduction in promotional activity was the main reason for the online business’s decline. He reduced his financial year 2020 sales estimate by 5%.
“It will be tough to retain a disciplined approach to promotional activity when much of the industry is doing the opposite,” he said.
With fewer customers entering its 73 stores and 174 UK concessions, revenue from that part of the business fell by 7%.
Shore Capital analyst Greg Lawless said the fall in online sales was particularly worrying “for a festive period that was partly online driven across the UK retail trade.” He added that the company could also struggle with too much retail footage.
Reporting by Elizabeth Howcroft; editing by Kate Holton and Jane Merriman