REG - Quiz PLC - Final Results
29/08/2024 07:00
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RNS Number : 0704C Quiz PLC 29 August 2024
29 August 2024
QUIZ plc
("QUIZ" or the "Group")
Final Results for the year ended 31 March 2024
FY24 outcome consistent with prior trading update, with consumer demand
impacted by cost-of-living pressures
Strategic initiatives underway to improve performance and profitability whilst
managing cash position
QUIZ, the omni-channel fashion brand, announces its final audited results for
the year ended 31 March 2024 ("FY 2024").
Financial highlights:
The income statement set out below is included to show the underlying
performance of the Group:
Year ended 31 March 2024 Year ended 31 March 2023 Change £m Change %
£m
Revenue 82.0 91.7 -9.7 -10.6%
Gross profit 51.0 56.5 -5.5 -9.7%
Recurring operating expenses -55.7 -54.2 -1.4 +2.6%
Other income 0.2 0.2 - -
Operating (loss)/profit pre non-recurring expenses -4.5 2.5 -7.0 -280.0%
Non-recurring operating expenses -1.5 - -1.5 -
Operating (loss)/profit -6.0 2.5 -8.5 -340.0%
Finance costs (net) -0.7 -0.2 -0.5 +250.0%
(Loss)/profit before tax -6.7 2.3 -9.0 -391.3%
EBITDA 0.9 6.2 -5.3 -85.5%
· Consistent with the trends outlined in the Group's Trading
Update on 28(th) March 2024 and further to the impact of cost-of-living
pressures on consumer demand Group revenue decreased 11% year on year to
£82.0 million (2023: £91.7 million)
· Higher levels of full price sales resulted in gross margin
increasing to 62.2% (2023: 61.6%)
· EBITDA of £0.9 million (2023: £6.2 million) with the reduced
revenues in the year being the main factor leading to the lower EBITDA
· Loss before tax of £5.2 million prior to £1.5 million
non-recurring impairment charge (2023: £2.3 million profit)
· Operating cash outflow of £0.9 million (2023: inflow of
£5.9 million)
· Total liquidity headroom at 31 March 2024 of £2.0 million, being
a cash balance of £0.3 million and £1.7 million of unutilised bank
facilities (31 March 2023: £8.3 million, being cash of £7.6 million and
£2.1 million of unutilised bank facilities less £1.4 million of bank loans)
Operational highlights:
· Change of our largest International partner will drive a
positive uplift in trading going forward after revenues in the period were
negatively impacted by the transition
· Four new stores opened and two relocated to larger shops in
our new design format with two United Kingdom store closures and one Republic
of Ireland (ROI) store closure during the period
· QUIZ's store estate comprised 64 stores in the United
Kingdom and four in the ROI at the end of the year (2023: 62 in the UK and 6
in the ROI)
· As previously reported, following a period of difficult
trading, the Board led by Non-Executive Chairman Peter Cowgill, initiated a
thorough review of the strategic options available to the Group. This
process was focussed upon evaluating a broad range of options to maximise
shareholder value. As part of this review, Sheraz Ramzan was appointed as
Chief Executive Officer on 28th March 2024, shortly prior to the end of the
Period. The Board believes Sheraz brings a fresh approach along with extensive
experience and knowledge of the business
Post year end trading and outlook:
· Further to appointment of Sheraz Ramzan as Chief Executive
Officer, a turnaround strategy to return the business to profitable growth is
being implemented. The strategy is focussed on ensuring the business leverages
its core strengths being:
· A well-established omni-channel model which provides a platform for
long-term success
· The distinctiveness of the QUIZ brand which is known for its occasion
wear and dressy categories
· The store portfolio which provides significant opportunities for
customer engagement
· An international model which provides the opportunity for low-risk,
capital light growth opportunities
· To support the turnaround strategy, a series of key operational
initiatives are being implemented to improve the Group's performance,
including:
· Reviewing and having greater clarity on QUIZ's target customer and
updating the brand identity to re-align our Marketing and Buying and
Merchandising activities;
· Restructuring the Buying and Merchandising function to provide a
clearer focus on developing product and pricing strategies, which includes the
recruitment of a new Head of Merchandising as well as increasing the resource
available to our Buying Team;
· Fresh marketing approach to elevate the brand, including creating a
more aspirational image through refreshed social media activity;
· Expanding the distribution channels available to the business
including the re-launch of QUIZ on Debenhams.com and associated websites; and
· Leveraging off the newly introduced omni-channel system to better
service customers including the option to offer same day click and collect
functionality across the store estate.
· Bank facilities of £4 million renewed post year end (subject
to renewal on 30 June 2025)
· Discussions have commenced with Tarak Ramzan, the Company's
founder and largest shareholder with regards to the provision of a £1 million
loan facility to provide additional liquidity headroom for working capital
purposes
· Total liquidity headroom at 28 August 2024 of £2.3 million,
being a cash balance of £0.4 million and £1.9 million of undrawn banking
facilities
· Consistent with the Group's Trading Update on 27(th) June 2024,
revenues in the four months to 31 July 2024 decreased 11% on the prior year to
£27.3 million
· In recent weeks there are 'green shoots' from a number of the
initiatives outlined above to improve business performance with an improvement
across in-store and online revenues relative to previous months
· The Board expect the trading environment in H2 to remain
challenging, albeit the Group has softer comparatives in the second half of
the financial year. There remains uncertainty with regards to consumer demand
and inflationary cost pressures, but the Board are targeting an improvement in
financial performance through increasing revenues and continued cost controls
· Despite the macro-economic challenges, the Board is confident
that the Group's turnaround strategy led by the new CEO will improve QUIZ's
performance and return the business to profitable growth in the medium-term
Sheraz Ramzan, Chief Executive Officer, commented:
"Whilst these results are disappointing - in part driven by the challenging
macroeconomic conditions impacting many retailers - we have a clear plan to
improve performance by leveraging our key strengths as an omni-channel
retailer with a distinctive brand. We have identified several focus areas to
build a more resilient business, improve our performance, and return to
profitable growth in the medium term.
In the new financial year to date we have already implemented several
operational initiatives which I am confident will support our longer-term
turnaround strategy. Whilst trading conditions in the current year have
remained challenging and our turnaround will take time, I am pleased with the
speed at which as a team we have been able to drive positive changes in the
business. I would like to take this opportunity to thank all of my colleagues
at QUIZ for their contribution and dedication over what has been a challenging
year. I value their continued support as we continue to rollout our plans for
the business that I am confident will return QUIZ to profitable growth."
Enquiries:
QUIZ plc Via Hudson Sandler
Sheraz Ramzan, Chief Executive
Gerry Sweeney, Chief Financial Officer
Panmure Liberum Limited +44 (0) 207 886 2500
(Nominated Adviser and Broker)
Emma Earl, Ailsa McMaster
Rupert Dearden
Hudson Sandler LLP (Public Relations) +44 (0) 207 796 4133
Alex Brennan / Emily Brooker quiz@hudsonsandler.com (mailto:quiz@hudsonsandler.com)
Notes:
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR").
About QUIZ:
QUIZ is an omni-channel fashion brand, specialising in occasion wear and
dressy casual wear. QUIZ delivers a distinct proposition that empowers its
fashion forward customers to stand out from the crowd.
QUIZ's buying and design teams constantly develop their own product lines,
ensuring the latest glamorous looks at value prices. Our flexible supply
chain, together with the winning formula of style, quality, value and
speed-to-market has enabled QUIZ to grow rapidly into an international brand
with stores, concessions, franchise stores, wholesale partners and
international online partners.
QUIZ operates through an omni-channel business model, which encompasses online
sales, standalone stores, concessions, international franchises and wholesale
arrangements.
To download images please visit:
http://www.quizgroup.co.uk/media-download-centre/
(http://www.quizgroup.co.uk/media-download-centre/)
For further information:
https://www.quizclothing.co.uk/ (https://www.quizclothing.co.uk/)
http://www.quizgroup.co.uk/ (http://www.quizgroup.co.uk/)
CHAIRMAN'S STATEMENT
Introduction
The Group's disappointing financial results for the year ended 31 March 2024
reflect the impact of inflationary pressures on consumer confidence and
spending. This has led to a reduction in revenues during the year. Despite
management controlling costs tightly and improving the gross margin percentage
generated the Group incurred losses in the year.
As previously reported, following a period of difficult trading, the Board
initiated a thorough review of the strategic options available to the Group.
This process was focussed upon evaluating a broad range of options to maximise
shareholder value.
As part of this review, Sheraz Ramzan was appointed as Chief Executive
Officer, and QUIZ is now focused upon implementing a turnaround strategy to
move the business back into profitable growth. This will be underpinned by a
focus on recalibrating the QUIZ brand, its product offering and reconnecting
with consumers.
Moving forward we will focus more on QUIZ's core strengths while also
exploring opportunities to expand our product offerings. Our trademark
occasion and dressy wear for social events has always been central to the QUIZ
brand, however we acknowledge that we must better leverage this product focus
and connect with customers more effectively, in doing so becoming better known
as a go-to brand for great value, stylish options for a variety of social
occasions including lunches with friends, a day at the races, Christmas
parties and weddings.
QUIZ has prided itself in providing a good value option to our customers who
continue to show a preference for newer full priced product. The offering in
store and online over recent years has sometimes been impacted by too much
discounted stock. We are focused on reducing the amount of promotional
activity across the business and the volume of older stock held by
concentrating sale stock in a selected number of clearance outlets. This will
allow the remainder of the estate to focus more on driving full price sales.
I am also encouraged by steps that have been taken to restructure our Buying
and Merchandising function, including the recruitment of a new Head of
Merchandising as well as increasing the resource available to our Buying
Team. In addition, the increased clarity on who the QUIZ customer is will
enable us to present more focused products to customers supported by more
relevant marketing campaigns.
Our store portfolio continues to provide a positive option to engage with
customers. This reflects the well-located nature of our store estate as well
as customers' desire to interact directly with the brand whether that be
through purchasing in-store, utilising our click and collect in store service,
ordering in-store, or exchanging/returning to store.
I would like to take this opportunity to thank the Group's management team and
all colleagues across the business for their continued commitment and hard
work during this challenging year and I am confident that they will continue
to work diligently to implement our turnaround plan.
Board Changes
In March 2024, Tarak Ramzan, the founder of the business, stepped down as CEO
and was succeeded by Sheraz Ramzan, former Chief Commercial Officer. Having
worked with the business since 2004 Sheraz has extensive experience and
knowledge of the business and he brings a fresh approach to implementing the
required turnaround strategy to return the business to profitability.
Tarak, as the largest shareholder of the Company, agreed to assume a
Non-Executive Director role going forward and we are pleased to have access to
his continued support and input.
In November 2023, Charlotte O'Sullivan, who had been a Non-Executive Director
since the Group's IPO in 2017, stepped down from the Board. I would like to
recognise Charlotte's significant contribution to the Group. Further to this
departure, the Board continues to give consideration to the appointment of one
additional independent Non-Executive Director and will provide an update in
due course.
ESG and operating an ethical supply chain
The Board continues to prioritise ensuring that the Group has an ethical and
responsible supply chain that all QUIZ's stakeholders are proud of. The Group
is committed to continuing to invest in this critical area of the business to
ensure that the Group's systems remain robust and that the Group's strict
Ethical Code of Practice is always adhered to by all QUIZ suppliers.
There is an ongoing programme in place to ensure that all our products are
supplied in line with our Ethical Code of Practice. Regular supplier visits
continue to be conducted and processes are in place to allow for clear
visibility across the Group's supply chain. The Board remains resolutely
committed to ensuring the Group's systems, processes and culture are fit for
purpose to assure compliance in this area.
Further detail on the Group's ESG priorities can be found in our Annual
Report.
Dividends
The Board does not recommend the payment of a final dividend (2023: £nil).
The business will remain focussed on delivering a sustainable profitable
performance, subject to which the Board would anticipate reinstating dividend
payments.
Outlook and current trading
Subsequent to the year end, QUIZ continues to be impacted by inflationary
pressures impacting consumer confidence. The Board is focussed on
reinvigorating Quiz and securing a return to revenue growth and
profitability. Under our new CEO, a number of initiatives to improve
business performance have commenced which have shown initial progress with
recent weeks having seen an improvement in store and online revenues relative
to previous months.
International revenues have been consistent year-on-year and revenues from our
own stores have been broadly comparable with the prior year on a like-for-like
basis in the first four months of FY25. Online sales continue to be impacted
by the challenging environment.
The Group has generated sales of £27.3 million in the four months to 31 July
2024, broken down across the Group's channels as follows:
I April to 31 July 2024 I April to 31 July 2023 Year-on-year change
Online £7.4m £9.2m -19.6%
UK stores and concessions £13.9m £15.6m -10.9%
International £5.9m £5.9m -
Total £27.3m £30.7m -11.1%
Gross margins are in line with expectations and are broadly consistent with
the previous year. The business continues to actively manage the increased
cost pressures affecting the wider retail sector, including the impact of
higher payroll costs further to the increase in National Living Wage.
Given the uncertain economic outlook, sustained and significant improvement in
business performance will take time to be realised. These improvements are
likely to take time to impact upon revenue and profits so costs control and
careful working capital management remains key in securing future growth.
Whilst the Group looks to successfully implement its turnaround plan it also
remains committed to review other potential strategic options that may be
available.
Despite the current macro-economic challenges, the Board is confident that the
Group's turnaround strategy led by the new CEO will improve QUIZ's performance
and return the business to profitable growth in the medium-term.
Peter Cowgill
Non-Executive Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
I am pleased to present my first report as Chief Executive further to my
appointment to the role towards the end of the Financial Year on 28 March
2024. I would like to express my thanks to Tarak Ramzan, my predecessor, who
helped establish the QUIZ brand in 1994 and successfully developed the
business since that date. I look forward to his continued support through
his role as a Non-Executive Director.
The past year, has been challenging with the decline in consumer confidence
impacting each of our revenue streams as shown below:
FY 2024 FY 2023 Year-on-year change Share of revenue 2024 Share of revenue 2023
UK stores and concessions £41.7m £45.5m - 8% 50.8% 49.6%
Online £24.5m £29.8m - 18% 29.9% 32.5%
International £15.8m £16.4m - 4% 19.3% 17.9%
Total £82.0m £91.7m - 11%
Having been involved in the business for several years, I am confident in what
I believe are our core strengths, and these will underpin our future success:
- The distinctiveness of the QUIZ brand which specialises in occasion
wear and dressy categories and resonates with a broad age range of customers
- Our well-established omni-channel model
- Our store portfolio which provides significant opportunities for
customer engagement
- An International model which provides the opportunity for low-risk,
capital light growth opportunities
Despite these fundamental attributes, we acknowledge there are areas where we
must improve our performance to succeed in what is a highly competitive
market. Since assuming the role of CEO, we have identified the following key
strategic areas to focus on in order to improve our performance:
1. Reconnecting with consumers across our omni-channel model
A key strength of our business which has the potential to provide additional
benefits to the Group is our distinctive brand and well-established
omni-channel footprint to reach consumers.
The Group believes that stores and concessions with appropriate cost bases
will continue to make a positive contribution going forward. We will also
continue to undertake initiatives to promote footfall into stores including
trialling the introduction of new product categories in store as well as
increasing the range of sizes available in store complementing the broader
range of sizes available online.
QUIZ's online channel provides the potential for significant long-term growth.
Online sales continue to be focussed upon demand for occasion wear and dresses
and reflect the brand's long-established reputation with these products.
Given the long-term trends we have seen towards increased online shopping, we
continue to believe that, with the correct product offering, QUIZ's online
channel offers significant long-term profitable growth potential for the
Group. We will also continue to develop attractive online partnerships which
provide greater exposure for the QUIZ brand and, following the year end, we
were pleased to recommence sales through Debenhams.com. We also plan to launch
our own Tik Tok shop in the near future.
In addition to the above, we have begun implementing a number of other
initiatives to better cater to our customers' demands:
· Click and collect - in February 2024 we introduced a new sales and
stock system, and we are now trialling the option for customers to place an
order online for stock held in store to collect within three hours in select
stores. This ensures stock availability for the customer, the dispatch of
online sales from stores and will provide a unified view of inventory and the
basis for improved stock utilisation across the business
· Flexible payment options - we introduced Klarna a payment option in
stores to boost conversion rates and average transaction values, whilst,
providing customers with greater flexibility to manage costs as pressures on
consumer spending persist.
· Loyalty program - later this year we plan to launch a new loyalty
program to complement our VIP delivery scheme, to reward customers for their
purchases and encourage more frequent spend.
2. Elevating the QUIZ brand
QUIZ is a distinctive fashion brand which, over many years, has developed a
specialisation in occasion wear and dressy casual wear for women. QUIZ's core
business continues to deliver a differentiated proposition that empowers
fashion-forward females to stand out from the crowd. Our brand proposition is
underpinned by providing great value rather than delivering the cheapest price
possible.
The QUIZ brand continues to resonate with a broad age range of customers. Our
core customer group is aged between 18 and 40, with this breaking down to
those customers over and under 25 who have different product preferences.
Going forward, we will have increased focus on our core customer groups,
giving us greater clarity as to who we are buying for and how they should be
marketed to. Our purchasing will be clearly focussed upon appealing to these
demographic groups with distinct marketing approaches to those below or above
25.
Our marketing activity in the last year utilised a pipeline of celebrity and
influencer activity across the year which was supplemented with digital
marketing and offline activity to push the QUIZ brand to the forefront of our
target customers' minds.
Going forward we will look to enhance and elevate the presentation of the QUIZ
brand across all relevant customer touch-points with a focus on making it more
aspirational for our customers.
Part of this process includes refreshing our various social channels to
support this fresher approach and to present the brand more positively. This
approach will focus on unique QUIZ content to improve customer attachment and
engagement. The focus is upon presenting the QUIZ brand positively to
potential new customers as well as improving the brand loyalty and affinity of
our existing customers.
We will undertake more marketing to raise brand awareness as well as a broader
range of more innovative marketing initiatives, including leveraging our
omni-channel model to host influencer activity and social events at our
flagship stores with a view to driving customer traffic both in-store and
online.
The above activity will be conducted by reallocating existing marketing spend
which has been to date primarily focussed on digital marketing activities.
3. Recalibrating our product proposition
QUIZ's established strength is its offering on trend product for social
activities ranging from lunch with friends through to attending weddings.
The business has a well invested infrastructure and a proven successful supply
chain which allows us to source clothes in a responsible and ethical manner.
This allows for the business to respond to customer demands and to provide
on-trend product whether it be influenced by social media, the catwalk or
television.
QUIZ continues to introduce new products to meet customer demand as trends
emerge throughout the season. The Board believes this remains an important
component for success.
Since the year end, we have been restructuring our Buying and Merchandising
team to inject new talent and ideas. To date this process has included the
appointment of a new Head of Merchandising as well as recruiting additional
talent into the Buying team with a focus on expanding product ranges and
optimising category mixes.
We will be focussed on taking advantage of established product strengths, as
supported by our customer feedback, with a focus on evening and occasion wear
along with clubby and dressy casual wear.
This will include improving our category optimisation through initiatives such
as extending size ranges, enhancing quality, refining our pricing architecture
and improving margins through reduced markdowns.
We continue to work to broaden our supply base to help reduce any dependency
on any one particular supplier or region. Our supply chain and ability to
constantly refresh products for sale in store and online are strong
competitive advantages.
4. Selective international growth potential through capital light model
Our experience has shown that the QUIZ brand can flourish in international
markets when supported by the right local partner. Our mix of casual and
occasion wear can be tailored for each market and our flexible routes to
market have been beneficial.
We will continue to expand our international reach with a highly targeted
strategy through a capital light model, working with successful and ambitious
local partners. We are actively identifying opportunities to extend our sales
through low-cost international expansion through online, consignment and
concession routes to market.
The Middle East is the largest region for QUIZ internationally. We have a
positive trading relationship with Al Shaya, who operate concessions in
Debenhams stores, across the United Arab Emirates, and provides the basis for
future growth in these markets.
Towards the end of the Financial Year in March 2024 we completed the smooth
transition of switching our largest international territory to a new
partner. Our business in Saudi Arabia switched to Al Othaim and our 15
stores transferred to them. Our relationship with Al Othaim has started
positively contributing to an uplift in International revenues post
year-end. In addition we have agreed a program of refurbishment for several
of our Saudi Arabian stores and to open four new stores by the end of FY25.
In the transition, revenues from the previous partner were impacted as reduced
levels of stock was transferred to them in the second half of the year. This
reduction in revenues was the primary factor for the overall decline in
International revenues in the year.
The US is another important market internationally. We have been working
with a new partner who is facilitating growth through holding stock on
consignment and undertaking direct deliveries on our behalf to consumers of
Macys and Nordstrom. We look forward to this business developing
further. In addition, we have commenced deliveries on a wholesale basis to a
new department store customer which provides further growth opportunities.
5. Managing costs
Given the decline in revenues in the year there has been an increased level of
discounted stock and promotional activity in store and online which detracts
from the presentation and promotion of full price product. As part of the
transition towards a more full-priced stock strategy subsequent to the
year-end we have undertaken discounting activity and have to date sold over
300,000 units of our aged stock. Going forward we are targeting more focussed
activity for the clearance of discounted product either through short
promotions in store or through channelling discounted product to designated
clearance shops to allow for an increased focus on full price product where
appropriate.
Whilst inflationary pressures have eased we continue to encounter cost
pressures in relation to product and fluctuations in shipping costs. Given
this we have adjusted prices to maintain our gross margin whilst looking to
broaden the range of prices offered to customers so they have a wide range of
options suitable for their budgets.
During the year we completed the previously announced investment at our
Distribution Centre which was focussed on accommodating more efficient working
practices. This work provided a new mezzanine level to increase storage
space and an improved layout at a cost of £1.3 million.
We will continue to regularly review our cost base to ensure it is appropriate
for the revenues that will be generated going forward.
Strategic KPIs
FY 2024 FY 2023 Change
Active customers 521,000 642,000 -19%
Online sales as a % of turnover 29.9% 32.5% -3%
International outlets serviced 142 90 +58%
UK retail space - square footage 129,000 145,000 -11%
The QUIZ community
I would like to thank all my colleagues for their hard work and contribution
in the last financial year. I appreciate the commitment and professionalism
shown by our colleagues across our stores and concessions, distribution centre
and head office through these difficult times. I am confident that we have a
strong team, and that our plan to turnaround our business is the right one.
I would also like to thank our suppliers, business partners and customers for
their continued support, allowing the business and brand to approach the
future with confidence.
Whilst the environment remains challenging and there is much to do to improve
QUIZ's performance, I am optimistic for the future as we drive the QUIZ brand
forward with renewed energy and exciting initiatives. We have identified clear
strategic priorities and are already making progress against these. I believe
in our fundamental attributes as a business and brand and that our strategic
plan will return the Group to profitable growth in the medium term and
maximise shareholder value.
Sheraz Ramzan
Chief Executive Officer
FINANCIAL AND BUSINESS REVIEW
Group overview
The financial performance of the business has been impacted by the widely
reported challenging trading conditions further to consumer confidence being
eroded by inflationary pressures. This has led to a reduction in traffic
in-store and online leading to lower revenues across each area of our business
during the year. Whilst a higher gross margin percentage was generated and
operating costs reduced this was not sufficient to offset the contribution
lost from the drop in revenues. As a result, a loss was recorded in the
year.
Group revenue decreased 11% to £82.0 million (2023: £91.7 million).
Further to this decrease in revenues, an operating loss prior to non-recurring
administrative costs of £4.4 million was incurred (2023: £2.5 million
profit).
Financial KPIs
FY 2024 FY 2023 Change
Revenue £82.0m £91.7m - 10.6%
Gross margin 62.2% 61.6% + 0.6%
EBITDA % 1.1% 6.8% - 5.7%
Cash (outflow)/inflow from operating activities -£0.9m £5.9m - £6.8m
EBITDA decreased to £0.9 million (2023: £6.2 million) which represented an
EBITDA margin of 1.1% (2023: 6.8%). Group loss before tax was £6.7 million
(2023: Profit of £2.3 million). The loss per share was 5.05 pence (2023:
Earnings per share of 1.64 pence).
Bank borrowings net of cash at the year-end amounted to £2.0 million (2023:
cash net of borrowings of £6.2 million).
Revenue
Group revenue decreased by 11% to £82.0 million from £91.7 million in 2023,
with our three revenue channels shown below:
FY 2024 FY 2023 Year-on-year growth Share of revenue 2024 Share of revenue 2023
UK stores and concessions £41.7m £45.5m - 8% 50.8% 49.6%
Online £24.5m £29.8m - 18% 29.9% 32.5%
International £15.8m £16.4m - 4% 19.3% 17.9%
Total £82.0m £91.7m - 11%
UK stores and concessions
Sales in the Group's UK standalone stores and concessions decreased 8% to
£41.7 million (2023: £45.5 million). The decline was largely
attributable to a drop in footfall across our store estate with conversion
rates and the average transaction value remaining consistent year on year.
During FY24, new stores were opened in Southampton, Plymouth, Fareham and
Liverpool. In addition, one of our flagship stores at Braehead, Glasgow, as
well as our Grimsby store were relocated during the year. We closed our
store in Ayr and our Bluewater store closed in March 2024.
Further to the above changes the number of UK stores operated at the end of
the year amounted to 64 (2023: 62) with an average lease length amounted to 25
months (2023: 24 months).
Subsequent to the year-end work on relocating our Trafford Park store was
completed and the new store was opened in May 2024 and our stores in
Cambridge, East Kilbride and Westfield Stratford were closed as part of our
active management of our store portfolio.
Our Concessions continue to provide a flexible and capital light route to
market. During the year, ten concessions were closed and no new concessions
were opened, resulting in a reduction in the number operating at 31 March 2024
to 57 (2024: 67).
As a result of these changes, total selling space across the stores and
concessions at 31 March 2024 decreased by 11% to 129,000 sq. ft. (2023:
145,000 sq. ft.).
Online
In FY 2024, the decline in revenues reflected the impact of lower traffic to
the QUIZ site reflecting the reduced consumer demand. Partially offsetting
this decline was an improvement in the average transaction value and
conversion rates year on year.
The business continues to sell its product through a number of selected
third-party websites through a combination of consignment and wholesale
arrangements. In the past year sales through these partners amounted to 34%
of online revenues (2023: 30%). Subsequent to the year end the Group has
recommenced sales through the Debenhams and other related websites.
Revenues from QUIZ's own website fell 23% and it contributed 66% of total
online sales (2023: 70%). Sales through third-party websites declined by 8%
in the year with a number of changes in the partners serviced occurring in the
year.
The impact of the reduced demand during the year was reflected in the number
of active customers at 31 March 2024 which decreased 16% in the year to
521,000 (2023: 642,000).
Further to the above online sales in the year represented 30% of QUIZ's Group
revenue (2023: 33%).
International
International sales include revenue from QUIZ standalone stores and
concessions in the Republic of Ireland and franchises in 15 countries. As
with the UK sales, International revenues were impacted by the increased cost
of living impacting demand leading to a 4% fall to £15.8 million (2023:
£16.4 million).
Revenues in the Republic of Ireland decreased 22% in the year to £5.0 million
(2023: £6.4 million) further to the closure of two of the six stores and a
general decline in demand. At 31 March 2024 the business operated 4 stores
and 21 concessions in Ireland (March 2023 - 6 stores and 18 concessions),
Our franchise sales benefited from the growth in revenues with a number of key
partners which helped partially offset the negative impact of revenues as we
transitioned to new partner in Saudi Arabia. Further to this, revenues
increased 8% to £10.8 million (2023: £10.0 million).
Gross margin
The gross margin percentage generated in the year increased from previous
levels reflecting the consumer's preference for new full price product. In
addition, a higher proportion of sales were generated through stores and
concessions which are traditionally higher margin channels.
Further to these factors, the gross margin in the year increased to 62.2%
(2023: 61.6%).
Promotional activity which is undertaken on a targeted basis increased
subsequent to the year end to target the sale of excess stock that had
accumulated during the year.
The Group remains focussed upon ensuring that forward commitments on stock are
managed to allow the business to be responsive to changes in customer demand
and that any slow moving stock is discounted at an early stage to help improve
the turnover of stock.
During the year we continued to encounter increased product cost and
fluctuations in the costs associated with shipment costs. Whilst we have
marginally increased prices to maintain our gross margin, we continue to
present a range of price points to customers to meet their price expectations.
Whilst freight costs have fluctuated during the year they are lower than
previous levels which allows for more product to be shipped by air freight.
Further to this, the product offering can be more responsive to trends and
consumer preferences.
Operating costs
Whilst the Group's revenues decreased in the period there is a large fixed
element to operating costs which restricts the reductions that can be
applied. In addition, costs continued to be impacted by inflationary
pressures in the year. Recurring operating costs increased by 2 from £54.3
million to £55.6 million. Excluding depreciation charges recurring operating
costs remained at a similar level at £50.5 million (2023: £50.5 million).
Recurring administrative costs increased by £2.5 million or 6% to £44.2
million (2023: £41.7 million). The most significant changes in costs
included:
· A £1.9 million increase or 10% in employee costs reflecting
increases in the amount paid as well as higher employee numbers
year-on-year. The increase in employee costs is impacted by the 9% increase
in the National Living Wage which has a knock-on impact on other employees to
maintain the differential in wages between roles; and
· A £0.6 million or 33% increase in depreciation and amortisation
costs (excluding depreciation charges in relation to leases for standalone
stores which are reflected in property costs) to £2.4 million (2023: £1.8
million) which reflect the higher charges from the investment in new stores in
the last two years as well as the spend of expanding capacity at the
distribution centre in the current year
· A £0.3 million or a 10 decrease in marketing costs to £2.8 million
in line with the decrease in revenues and as a result marketing investment as
a proportion of Group sales for FY 2024 was maintained at 3.0% (2023: 3.0%).
Subsequent to the year end there continues to be pressure on payroll costs
further to the increase in the National Living Wage and other associated
increases. This will increase employee costs by circa £1.8 million in FY25.
Further to the decline in revenues and profitability retail store and other
assets were subject to an impairment review based on whether current or future
events and circumstances suggested their recoverable amount may be less than
their carrying value. As a result of this exercise, the Group recorded a
£1.5 million non-recurring administrative charge, comprising £0.4 million
relating to the impairment of right-of-use assets, £0.9 million for the
impairment of plant, property and equipment and £0.2 million for the
impairment of intangible assets.
Distribution costs decreased 9% to £11.4 million (2023: £12.5 million) and
is reflective of the lower revenues generated in the period.
Included in distribution costs are commission payments to third parties which
sell product on behalf of QUIZ. These decreased as a result of the lower
revenues generated through concessions and International franchise partners.
Also reflected in the decrease in distribution costs are carriage costs to
stores, concessions and franchises as well as to online customers. These
costs were consistent year on year.
Other operating income
Other operating income of £0.2 million (2023: £0.2 million) was generated in
the period. The current year income relates to the recovery of certain
balances owed the Group by a previous subsidiary which entered into
administration in June 2020. The prior year income arose from the disposal of
inventory which was no longer appropriate for sale through our existing
revenue channels.
Finance costs
The finance cost of £0.8 million (2023: £0.2 million) primarily relates to
interest costs arising on the lease payments for stores in accordance with
IFRS 16.
Taxation
In the current year the Group recorded an income tax credit of £0.4 million
(2023: income tax charge of £0.3 million) which represents a reported tax
credit rate of 6.7% (2023: tax charge rate of 11.3%).
As at 31 March 2024 the deferred tax asset amounted to £1.1 million (2023:
£1.0 million). This balance reflects the anticipated future cash benefit
expected to be derived from utilising previously generated tax losses and
available capital allowances in excess of the recorded net book value.
The remaining unrecognised deferred tax asset at 31 March 2024 amounts to
£1.8 million (2023: £0.5 million).
Earnings per share
The basic loss per share for 2024 was 5.05 pence (2023: earnings per share of
1.64 pence).
Dividends
No dividend was paid during the year (2023: £nil). Given the recent financial
performance, the Board does not recommend the payment of a final dividend.
Cash flow and cash position
As at 31 March 2024, the Group had £2.0 million of total liquidity headroom,
being a cash balance of £0.3 million and £1.7 million of undrawn bank
facilities (31 March 2023: £8.3 million of total liquidity headroom).
On 28 August 2024 the total liquidity headroom available was of £2.3 million,
being a £0.4 million cash balance and £1.9 million of undrawn bank
facilities.
The £4.0 million of bank facilities available to the Group were renewed
subsequent to the year end. These facilities will expire on 30 June 2025.
There are no financial covenants applicable to these facilities.
In addition, discussions have commenced with Tarak Ramzan, the Company's
founder and largest shareholder, with regards to the provision of a £1.0m
loan facility to provide additional liquidity headroom for working capital
purposes. The terms of the loan facility will be subject to an independent
review (and will constitute a related party transaction for the purpose of the
AIM rules) in order to ensure that they are on an arms-length basis before
they can be approved by the Board's Independent directors. Details will be
announced in due course in the event that terms are agreed.
Net cash flow from operating activities resulted in an outflow of £0.9
million (2023: inflow of £5.9 million). Reflected in this outflow of cash is
a £1.5 million working capital outflow (2023: outflow of £0.9 million). The
outflow arose due to an increase in receivables of £2.5 million and a
decrease in payables of £0.1 million offset by a decrease of £1.1 million in
inventories.
Spend on property, plant and equipment and intangible assets amounted to £4.0
million and £0.6 million respectively (2023: £2.0 million and £0.5
million).
Included in property, plant and equipment was investment in new or relocating
stores amounting to £1.7 million in year, arising from four new stores and
two relocations during the year and spend on a further store relocation
completed shortly after the year end. In addition, £1.3 million was spent
on an expansion of our distribution centre which has increased its capacity.
Borrowings of £2.3 million comprise of £1.7 million of loans, being amounts
drawn down on the Group's working capital facility, and a £0.6 million
overdraft balance (2023: £1.4 million of loans drawn down). Both balances are
repayable in less than one year. The borrowings drawn in the year represents
the movement in the loan balances.
The payment of lease liabilities amounted to £2.9 million (2023: £1.8
million) and reflects an increase in the number of leases subject to fixed
rental payments. Given a number of existing leases were renewed or entered
into during the year, including those relating to four new stores, the amounts
outstanding in relation to lease liabilities increased to £9.9 million (2023:
£6.9 million).
Foreign currency hedging
The Group currently undertakes foreign exchange transactions.
The primary outflow of foreign exchange relates to the purchase of stock,
primarily in Chinese Renminbi. The primary inflow of foreign exchange relates
to Euro denominated revenues generated in Ireland.
The Group manages the risk associated with foreign currency fluctuations
through the use of forward contracts for the sale or the purchase of the
respective currency for a period between six and twelve months in advance. We
have currently hedged our expected currency outflows in respect of Chinese
Renminbi for the remainder of the financial year to 31 March 2025.
Gerard Sweeney
Chief Financial Officer
QUIZ plc
Consolidated statement of comprehensive income
Year ended 31 March 2024
Notes 2024 2023
£000 £000
Continuing operations
Revenue 2 81,957 91,680
Cost of sales (30,976) (35,166)
Gross profit 50,981 56,514
Recurring administrative costs (44,218) (41,728)
Non-recurring administrative costs 3 (1,512) -
Total administrative costs (45,730) (41,728)
Distribution costs (11,422) (12,544)
Other operating income 212 214
Total operating costs (56,940) (54,058)
Operating (loss)/profit 5 (5,959) 2,456
Finance income 6 79 89
Finance costs 6 (830) (248)
(Loss)/profit before income tax (6,710) 2,297
Income tax credit/(charge) 7 435 (260)
(Loss)/profit for the year ( ) (6,275) 2,037
Other comprehensive (expense)/income ( )
Foreign currency translation differences - foreign operations (72) 138
(Loss)/profit and total comprehensive (expense)/income for the year (6,347) 2,175
attributable to owners of the parent
( )
(Loss)/profit per share:
Basic and diluted earnings per share 8 (5.05)p 1.64p
All of the above income is attributable to the shareholders of the parent
company.
QUIZ plc
Consolidated statement of financial position
As at 31 March 2024
Notes 31 March 31 March
2024 2023
£000 £000
Assets
Non-current assets
Property, plant and equipment 10 5,912 4,688
Right of use assets 11 8,417 6,523
Intangible assets 12 2,486 2,703
Deferred tax assets 18 1,103 957
Total non-current assets 17,918 14,871
Current assets
Inventories 13 11,259 12,322
Trade and other receivables 14 9,950 7,429
Cash and cash equivalents 22 284 7,575
Total current assets 21,493 27,326
Total assets 39,411 42,197
Liabilities
Current liabilities
Trade and other payables 15 (12,563) (12,602)
Borrowings 16 (2,327) (1,410)
Lease liabilities 11 (3,732) (1,909)
Derivative financial liabilities 17 (36) (65)
Corporation tax payable - (291)
Total current liabilities (18,658) (16,277)
Non-current liabilities
Lease liabilities 11 (6,129) (4,967)
Deferred tax liabilities 18 - (20)
Total non-current liabilities (6,129) (4,987)
Total liabilities (24,787) (21,264)
Net assets 14,624 20,933
Equity
Called-up share capital 20 373 373
Share premium 20 10,315 10,315
Merger reserve 20 1,130 1,130
Retained earnings 20 2,809 9,115
Total shareholders' funds 14,627 20,933
QUIZ plc
Consolidated statement of changes in equity
Year ended 31 March 2024
Share Share premium Merger reserve Retained earnings Total
capital
£'000 £'000 £'000 £'000 £'000
At 1 April 2022 373 10,315 1,130 6,885 18,703
Profit and total comprehensive income for the year - - - 2,175 2,175
Share-based payments charge - - - 55 55
At 31 March 2023 373 10,315 1,130 9,115 20,933
Loss and total comprehensive expense for the year - - - (6,347) (6,347)
Share-based payments charge - - - 38 38
At 31 March 2024 373 10,315 1,130 2,806 14,624
QUIZ plc
Consolidated cash flow statement
Year ended 31 March 2024
Year ended Year ended
31 March 31 March
2024 2023
£000 £000
Operating activities
Cash generated by operations
(Loss)/profit for the year (6,275) 2,037
Adjusted for:
Depreciation of property, plant and equipment 1,837 1,263
Depreciation of right of use assets 2,872 1,898
Amortisation of intangible assets 602 589
Impairment of property, plant and equipment 935 -
Impairment of right of use assets 400 -
Impairment of intangible assets 177 -
Share-based payment charges 37 55
Exchange movement (68) 126
Finance income (79) (89)
Finance costs 830 248
Income tax (credit)/charge (435) 260
Decrease/(increase) in inventories 1,063 (612)
Increase in receivables (2,537) (1,384)
(Decrease)/increase in payables (68) 1,136
Net cash (used)/generated from operating activities (709) 5,527
Interest paid (129) (18)
Income taxes (paid)/refunded (12) 417
Net cash (outflow)/inflow from operating activities (850) 5,926
Investing activities
Payments to acquire intangible assets (562) (510)
Payments to acquire property, plant and equipment (3,996) (1,965)
Interest received 79 89
Net cash outflow from investing activities (4,479) (2,386)
Financing activities
Borrowings drawn 336 -
Borrowings repaid - (10)
Payment obligations under leases (2,874) (1,807)
Net cash outflow from financing activities 21 (2,538) (1,817)
Net (decrease)/increase in cash and cash equivalents (7,867) 1,723
Cash and cash equivalents at beginning of year 7,575 5,840
Effect of foreign exchange rates (5) 12
Cash and cash equivalents at end of year (297) 7,575
The Group considers bank overdrafts (see note 16) to be an integral part of
its cash management activities and these are included in cash and cash
equivalents for the purposes of the cash flow statement.
Selected notes to the Group financial statements
Year ended 31 March 2024
1 Significant accounting policies
General information
Quiz Plc (the 'parent company') is a public limited company, incorporated and
domiciled in Jersey. It is listed on AIM. The registered office of the Company
is 22 Grenville Street, St Helier, Jersey, Channel Islands E4 8PX. The
principal activity of the group is that of retailing clothes.
These financial statements have been prepared in accordance with UK-adopted
International Accounting Standards and the Companies (Jersey) Law 1991.
Basis of preparation
The Board of Directors approved this preliminary announcement on 28 August
2024. Whilst the financial information included in the preliminary
announcement has been prepared in accordance with the recognition and
measurement criteria of UK-adopted International Accounting Standards and the
Companies (Jersey) Law 1991, this announcement does not itself contain
sufficient information to comply with all the disclosure requirements of
UK-adopted International Accounting Standards and does not constitute
statutory accounts within the meaning of Companies (Jersey) Law 1991 but is
derived from the accounts of the Company for the years ended 31 March 2024 and
2023. The financial information is prepared on the same basis as set out in
the statutory accounts for the year ended 31 March 2023.
The financial statements are presented in Pounds Sterling because that is the
currency of the primary economic environment in which the Group operates.
Monetary amounts in these financial statements are rounded to the nearest
thousand. Foreign operations are included in accordance with the policies set
out below.
The annual financial statements have been prepared on the historical cost
basis, except for certain financial assets and liabilities which are carried
at fair value.
The preparation of financial statements in conformity with UK-adopted
International Accounting Standards requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported year. Although these estimates are based on management's best
knowledge of current events and actions, actual results ultimately may differ
from those estimates.
The statutory accounts for the year ended 31 March 2023 have been filed with
the Jersey Companies Registry and the statutory accounts for the year ended 31
March 2024 will be filed in due course. The auditors have reported on the
accounts for the years ended 31 March 2023 and 2024 which were unqualified and
did not include any matters to which the auditor drew attention by way of
emphasis and under 113B (3) or 113B (4) of the Companies (Jersey) Law 1991.
Their report for 2024 did include a matter to which the auditors drew
attention by way of emphasis without qualifying their report relating to a
material uncertainty over going concern.
Accounting standards in issue but not yet effective
At the date of issue of these financial statements, there are several
standards and interpretations issued by the IASB that are effective for
financial statements after this reporting period. Of these new standards,
amendments and interpretations, there are none which are expected to have a
material impact on the Group's consolidated financial statements.
Going concern
The Directors have prepared a detailed forecast with a supporting business
plan for the period to 31 March 2027 to determine whether the Group will have
adequate resources to enable it to operate as a going concern for the
foreseeable future.
When preparing this forecast, the Directors considered the current trading
levels, which have been consistent with management's expectation, and the
outlook for the Group against their detailed base case scenario and further
downside scenarios.
At 31 March 2024, the Group had cash of £0.3 million and £1.7 million of
unutilised banking facilities (2023: £6.2 million of net cash and £2.1
million of unutilised banking facilities).
Borrowing facilities
The Group has £4.0 million of banking facilities, which expire on 30 June
2025. These facilities comprise a £2.0 million overdraft and £2.0 million
working capital facility. There are no financial covenants associated with
these facilities, which are reviewed annually. Whilst the facilities are
repayable on demand the Directors believe that these facilities will be
available to the Group through to 30 June 2025 and will be renewed in due
course.
In addition, discussions have commenced with Tarak Ramzan, the Company's
founder and largest shareholder with regards to the provision of a £1.0m loan
facility to provide additional liquidity headroom for working capital
purposes. The terms of the loan facility will be subject to an independent
review (and will constitute a related party transaction for the purpose of the
AIM rules) in order to ensure that they are on an arms-length basis before
they can be approved by the Board's Independent directors. Details will be
announced in due course in the event that terms are agreed.
The Group had a net cash balance of £2.3 million at 28 August 2024, being a
£0.4 million cash balance offset by a £1.9 million bank loan.
Forecast scenarios
The Directors have reviewed management's detailed forecast and supporting
business plan for the twelve months from the date when these financial
statements are authorised to be issued. The forecasts have been produced on
the following basis:
· Base Case Scenario - given the continued cost of living pressures
impacting consumers the Base Case Scenario assumes sales through stores,
concessions and the QUIZ website will be at a similar level to the previous
year on a like-for-like basis in the period to September 2024. Thereafter
sales are forecast to be at a higher level on a like-for-like basis with
uplifts for stores and concessions of up to 12.5% in the period to 31 March
2025 up to 10.0% in the six months to 30 September 2025. This reflects the
anticipated benefit of a number of current initiatives including the
recalibration of the QUIZ product proposition, the elevation of the QUIZ brand
to be viewed as a more aspirational destination brand, achieving International
revenue growth and the continued management of our product and other costs.
The assumed sales levels are broadly consistent with those generated in the
four months to 31 July 2024. Gross margins and operating costs are assumed to
be at a similar level to the prior year other than for certain targeted cost
savings to be implemented from October 2024.
· Downside Scenario - given the Base case reflects the benefit of
certain initiatives being realised and due to the continued macroeconomic
pressures there remains uncertainty with regards achieving these targets, a
scenario has been modelled that assumes that none of the anticipated growth on
a like-for-like basis on store, concessions and QUIZ web sales is realised and
the full scope of the cost reduction programme are not achieved.
Within each forecast, management have reflected outstanding financial
commitments and the impact of previously realised cost savings. There are no
further anticipated savings incorporated in response to any downside scenario
for reduced revenues. Further actions could be undertaken to mitigate against
any shortfalls arising from these scenarios. These include securing additional
lending facilities, raising funds through a share capital issue, ceasing or
suspending loss-making activities and optimising working capital.
Neither the Base Case Scenario or Downside Scenario include any expected cash
outflow related to the contingent liability disclosed as part of note 25.
The Base Case Scenario indicates the Group will remain within its anticipated
available banking facilities, being the current bank facilities, through the
next twelve month period.
Without any mitigating factors or contingency, under the Downside Scenario
which the Directors consider to be a reasonably feasible scenario with regards
to sales and missing cost savings the Group would have limited headroom, based
on its existing bank facilities and the additional £1 million facility from
Tarak Ramzan being available, at certain points in the year and would
potentially require funding in excess of these facilities shortly after the
twelve month period. Should there be a decline in sales on a like-for-like
basis the Group would require funding in excess of our currently available
facilities in the forthcoming twelve month period. However, the Group
continues to manage its cash flow and is considering further options to
improve liquidity.
Going concern basis
The financial statements continue to be prepared on the going concern basis.
This conclusion is based on the Group's current forecasts and mitigating
actions available. With the continued challenges in the macro environment and
the sensitivity of management's assessment to reasonably possible downside
scenarios, coupled with the headroom on the existing bank facilities, the
Directors note there exists a material uncertainty related to Going Concern.
This may cast significant doubt over the Group's ability to continue as a
going concern and therefore, the Group may not be able to realise its assets
and discharge its liabilities in the normal course of business. The material
uncertainty related to Going Concern arises due to:
· The limited headroom within the existing funding facilities in the
context of an uncertain macro-economic environment and the sensitivity of
management's assessment to reasonably possible downside scenarios in lieu of
any additional financing;
· The availability of committed banking facilities until 30 June
2025, which is less than twelve months from the date when these financial
statements are authorised to be issued.
After considering the forecasts, sensitivities and mitigating actions
available to Group management and having regard to the risks and uncertainties
to which the Group is exposed (including the material uncertainty referred to
above), the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future, and operate within its borrowing facilities for the period twelve
months from the date when these financial statement are authorised to be
issued. Accordingly, the financial statements continue to be prepared on the
going concern basis.
Critical accounting estimates and judgements
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
value of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which the
estimate is revised where the revision affects only that year, or in the year
of the revision and future years where the revision affects both current and
future years.
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year are:
Impairment of property, plant and equipment, right-of-use assets and
intangible assets
Property, plant and equipment, right-of-use assets and intangible assets are
reviewed for impairment if events or changes in circumstances indicate that
the carrying amount may not be recoverable.
Management performs an impairment review for each cash generating unit ("CGU")
that has indicators of impairment. When a review for impairment is conducted,
the recoverable amount of an asset or CGU is determined based on value-in-use
calculations using the Board approved budget and future outlook and is
discounted using the weighted average cost of capital. Forecasts beyond the
period of the approved budget are based on management's assumptions and
estimates.
Future events could cause the forecasts and assumptions used in impairment
reviews to change with a consequential adverse impact on the results and net
position of the Group as actual cash flows may differ from forecasts and could
result in further material impairments in future years.
The Directors consider each revenue channel/steam to be a CGU; being stores,
concessions, online and international. In determining the anticipated
contribution from stores each individual store is considered to be a separate
CGU. In the current year we have performed an impairment review for each CGU.
The carrying value and impairment charge recognised for the year is shown in
Notes 3, 10, 11 and 12. For the year ended 31 March 2024, an impairment charge
of £1.5 million has been recognised in light of the reduced profitability of
the Group for the year and lower expectations in the relevant forecasts for
each CGU compared to those used in the prior year impairment review (2023:
£Nil).
Impairment of store CGU assets
Management has assessed whether impaired and unprofitable stores require an
impairment charge with regard to their right-of-use and property, plant and
equipment assets. This is recognised when the Group believes that the
unavoidable costs of meeting or exiting the lease obligations exceed the
benefits expected to be received under the lease.
The charge in the year based on anticipated future cash flows from stores
amounted to £410,000 (2023: £Nil). £203,000 of the charge is attributable
to property, plant and equipment and £207,000 to right-of-use assets. The
charge was split between four individual store CGUs.
The recoverable amount is based on the value in use. Value in use is
calculated from expected future cash flows using suitable discount rates being
14.6% (2023: 10%) and includes management assumptions and estimates of future
performance. Store asset carrying values are considered net of the carrying
value of any cash contribution received in relation to that store. The cash
flows are modelled for each store through to the lease expiry date. Cash flows
beyond the two-year board approved forecasts are extrapolated at a 0% growth
rate. No lease extensions have been assumed in the modelling.
Impairment of corporate/central assets
Further to the assessment of each CGU there was a impairment charge of
£1,102,000; £177,000 in relation to intangible assets, £732,000 property,
plant and equipment and £193,000 right-of-use assets held at a Group level
which support the cash generating units operations. The impairment charge was
split between 21 individual store CGUs totalling £939,000 and the Irish
concessions CGU totalling £163,000.
The recoverable amount is based on the value in use. Value in use is
calculated from expected future cash flows using suitable discount rates being
14.6% (2023: 10%) and includes management assumptions and estimates of future
performance. The cash flows are modelled for each cash generating unit using
two years of board approved forecasts, extrapolated at a 0-2% growth rate for
years three to five, and a terminal growth rate of 2%. Corporate/central costs
and assets are allocated to CGUs based on either revenue generated or the
proportion of costs directly attributable to the CGU.
Sensitivities
Management has performed sensitivity analysis on the key assumptions in the
impairment model using reasonably possible changes in these key assumptions. A
reduction in sales of 5% from that assumed and a 5% increase in the discount
rate used would increase the impairment charge by £0.5 million and £0.1
million respectively. This is the total increase across both stages of the
impairment review.
Inventory provision
Provision is made for those items of inventory where the net realisable value
is estimated to be lower than cost. Net realisable value is based on both
historical experience and assumptions regarding future selling prices and is
consequently a source of estimation uncertainty.
In the current year, management performed an assessment of all inventory,
taking into consideration current sales and forecast sell-through plans to
consider the impact on the period-end stock holding. The provision for aged
inventory is calculated by providing for 50% of inventory that is more than
three seasons old and providing for 100% of inventory that is more than three
years old. Given the potential for demand to be impacted going forward the
Group has provided up to 10% of the remaining inventory in the current year.
Given this approach the provision for aged inventory totalled £1,487,000 at
31 March 2024 (2023: £1,675,000).
2 Revenue
An analysis of revenue by geographical location is as follows:
2024 2023
£000 £000
UK stores and concessions 41,640 45,451
Online 24,517 29,872
International 15,800 16,357
81,957 91,680
2024 2023
£000 £000
United Kingdom 65,729 75,077
Rest of the world 16,228 16,603
81,957 91,680
3 Non-recurring administrative costs
2024 2023
£000 £000
Impairment of right of use assets 400 -
Impairment of intangible assets 177 -
Impairment of property, plant and equipment 935 -
1,512 -
The Directors consider each revenue channel/stream to be a CGU; being stores,
concessions, online and international. In determining the anticipated
contribution from stores each individual store is considered to be a separate
CGU. In the current year we have performed an impairment review for each CGU.
For the year ended 31 March 2024, an impairment charge of £1.5 million has
been recognised in light of the reduced profitability of the Group for the
year and lower expectations in the relevant forecasts for each CGU compared to
those used in the prior year impairment review (2023: £Nil).
4 Employee benefit expenses
Employment costs and average monthly number of employees (including Directors)
during the year were as follows:
2024 2023
£000 £000
Wages and salaries 16,353 14,970
Social security costs 1,265 1,142
Other pension costs 360 257
Agency costs 3,192 2,857
Share-based payment charges 38 55
21,208 19,281
No. No.
Retail 750 727
Distribution 100 98
Administration 145 150
995 975
Included above is £684,000 in respect of Directors' remuneration (2023:
£697,000).
5 Operating (loss)/profit
Operating (loss)/profit is stated after charging:
2024 2023
£000 £000
Cost of inventories recognised as an expense 30,976 35,166
Share based payments charges 38 55
Depreciation of property, plant and equipment 1,837 1,263
Impairment of property, plant and equipment 935 -
Depreciation of right of use assets 2,872 1,898
Impairment of right of use assets 400 -
Amortisation of intangible assets 602 589
Impairment of intangible assets 177 -
Short-term and variable lease costs 1,358 2,257
Foreign exchange losses 88 86
6 Finance income and costs
2024 2023
£000 £000
Interest on cash deposits 79 89
Finance income 79 89
2024 2023
£000 £000
Interest on lease liabilities 701 231
Interest on loans and overdrafts 129 17
Finance costs 830 248
7 Income tax
2024 2023
£000 £000
UK corporation tax - current year (176) 393
UK corporation tax - prior year (407) (53)
Foreign tax 28 19
Deferred tax - current year (301) 104
Deferred tax - prior year 421 (203)
Tax on profit (435) 260
Reconciliation of effective tax rate
Profit on ordinary activities before taxation (6,710) 2,297
Profit on ordinary activities multiplied by standard rate of UK corporation (1,678) 436
tax of 25% (2023: 19%)
Expenses not deductible for tax purposes 102 43
Change in unrecognised deferred tax assets 1,035 32
Impact of overseas tax rate 74 (18)
Write down of previously recognised deferred tax asset - 23
Adjustments to previous years 32 (256)
(435) 260
8 Earnings per share
Number of shares: 2024 2023
No. No.
Weighted number of ordinary shares outstanding - basic and diluted
124,230,905 124,230,905
Earnings: £000 £000
(Loss)/profit (6,275) 2,037
Earnings per share: Pence Pence
Basic (loss)/earnings per share (5.05) 1.64
Diluted earnings per share is the same as the basic earnings per share each
year as the average share price during the year was less than the exercise
price applicable to the outstanding options and therefore the outstanding
options were not dilutive.
9 Dividends
No dividends in respect of 2024 were declared or are proposed (2023: £nil).
10 Property, plant and equipment
Leasehold Motor Computer Fixtures, Total
improvements vehicles equipment fittings and £000
£000 £000 £000 equipment
£000
Cost
At 1 April 2023 792 137 1,698 15,822 18,449
Additions 117 20 469 3,390 3,996
Disposals - - (6) 287 (293)
At 31 March 2024 909 157 2,161 18,925 22,152
Depreciation and impairment
At 1 April 2023 573 99 1,150 11,939 13,761
Depreciation charge 160 17 270 1,390 1,837
Impairment charge 25 6 59 845 935
Disposals - - (6) (287) (293)
At 31 March 2024 758 122 1,473 13,887 16, 240
Net book value
At 31 March 2024 151 35 688 5,038 5,912
At 31 March 2023 219 38 548 3,883 4,688
11 Right to use assets and lease liabilities
Property
£000
Cost
At 1 April 2023 8,888
Additions 4,686
Re-measurement adjustments (1) 948
Disposals (1,011)
At 31 March 2024 13,511
Depreciation and impairment
At 1 April 2023 2,365
Depreciation charge 2,872
Impairment charge 400
Disposals (543)
At 31 March 2024 5,094
Net book value
At 31 March 2024 8,417
At 31 March 2023 6,523
(1) Re-measurement adjustments have primarily arisen due to not exercising
break clauses and changes in rental amounts.
The Group presents lease liabilities separately within the statement of
financial position. The movement in the year comprised:
2024 2023
£000 £000
At 1 April 2023 6,876 1,139
Additions 4,686 7,313
Re-measurement adjustments 948 -
Disposals (476) -
Interest expense related to lease liabilities 701 231
Repayment of lease liabilities (including interest) (2,874) (1,807)
At 31 March 2024 9,861 6,876
Current lease liabilities 3,732 1,909
Non-current lease liabilities 6,129 4,967
Leases relate to the use of the Group's Head Office, Distribution Centre and a
number of its retail stores. Lease arrangements in respect of retail stores
include a combination of eases with fixed rents which are reflected in the
right of use assets and the associated lease liabilities and leases where
charges are related to the revenues generated in the relevant retail stores.
Costs in the year in respect of facilities in the year with fixed rentals
amounted to £2,538,000 (2023: £2,129,000) and £1,358,000 in respect of
leases with charges related to the revenue generated within that store (2023:
£2,257,000).
Short-term operating leases
At the balance sheet date, the Group had outstanding commitments for future
minimum lease payments under non-cancellable leases which fall due as follows:
2024 2023
£000 £000
Within one year 53 85
12 Intangibles
Goodwill Computer Trademarks Total
software
£000 £000 £000 £000
Cost
At 1 April 2023 6,175 4,337 165 10,677
Additions - 562 - 562
At 31 March 2024 6,175 4,899 165 11,239
Amortisation and impairment
At 1 April 2023 5,248 2,632 94 7,974
Amortisation charge - 586 16 602
Impairment charge - 177 - 177
At 31 March 2024 5,248 3,395 110 8,753
Net book value
At 31 March 2024 927 1,504 55 2,486
At 31 March 2023 927 1,705 71 2,703
The goodwill arose when Shoar (Holdings) Limited acquired the entire share
capital of Tarak Retail Limited in 2012 and reflects the difference between
the fair value of the consideration transferred and the fair value of assets
and liabilities purchased. Goodwill is assessed for impairment by comparing
the carrying value to value-in-use calculations. Value in use has been
estimated using cash flow projections based on detailed budgets and forecasts
over the period of two years, with a growth rate of 2% (FY 2023: decline rate
of 15%) and a pre-tax discount rate of 14.6% (FY 2023: 10%) applied, being the
Directors' estimate of the Group's cost of capital. The budgets and forecasts
are based on historical data and the past experience of the Directors as well
as the future plans of the business. No reasonable change in any of the
assumptions would result in an impairment charge and therefore no sensitivity
analysis is disclosed.
13 Inventories
2024 2023
£000 £000
Finished goods and goods for resale 11,259 12,322
The cost of inventories recognised as an expense during the year in respect of
continuing operations amounted to £30,976,000 (2023: £35,166,000). The cost
of inventories included a net credit in respect of write-downs of inventory to
net realisable value of £188,000 (2023: credit of £875,000). Inventories
are stated after provisions for impairment of £1,487,000 (2023: £1,675,000).
14 Trade and other receivables
2024 2023
£000 £000
Trade receivables - gross 3,372 3,292
Less allowance for expected credit losses (calculated under IFRS 9) (417) (333)
Trade receivables - net 2,955 2,959
Other receivables 1,782 2,113
Prepayments and accrued income 5,213 2,357
9,950 7,429
The Directors consider that the fair value of trade and other receivables is
not materially different from the carrying value.
15 Trade and other payables
2024 2023
£000 £000
Trade payables 9,513 7,116
Other taxes and social security costs 710 1,610
Accruals 1,042 2,585
Other payables 1,298 1,291
12,563 12,602
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The Directors consider that the fair value of
trade and other payables is not materially different from their carrying
value.
Included within other payables at the year-end date was a balance of £45,000
(2023: £59,000) owed to the Group's pension scheme.
16 Borrowings
2024 2023
£000 £000
Bank loans 1,746 1,410
Bank overdraft 581 -
2,327 1,410
Current 2,327 1,410
The Group's overdraft and loan facilities amount to £4.0 million (2023: £4.0
million) and are secured by an unlimited multilateral and cross-company
guarantee given by Zandra Retail Limited and Tarak International Limited and
also by a limited guarantee given by, and by a floating charge over the assets
of, Zandra Retail Limited and Tarak International Limited. The bank also holds
a right of set-offs between Zandra Retail Limited and Tarak International
Limited. All entities included in the guarantee are wholly owned subsidiaries
in the Group. In addition, the Company has provided a parent company guarantee
with respect to the facilities.
In addition, credit facilities are secured by a bond and floating charge from
Tarak Retail Limited over the whole of its property and undertakings.
The bank overdraft and loan facilities are annual facilities and are repayable
on demand. These facilities were renewed after the year end and are next
subject to review in June 2025.
Borrowings are denominated and repaid in Pounds Sterling, have contractual
interest rates that are either fixed rates or variable rates linked to the
Bank of England base rate that are not leveraged, and do not contain
conditional returns or repayment provisions other than to protect the lender
against credit deterioration or changes in relevant legislation or taxation.
17 Derivative financial instruments
The following is an analysis of the derivative financial instruments
liability:
2024 2023
£000 £000
Foreign currency forward contracts 36 65
Forward foreign exchange contracts are used to hedge exposure to fluctuations
in foreign exchange rates that arise in the normal course of the Group's
business.
As at 31 March 2024, the Group had commitments to buy the equivalent of
£3,950,000 of Chinese Renminbi (2023: £3,050,000).
18 Deferred tax
The following is an analysis of the deferred tax assets:
Tax Losses Fixed asset timing differences Total
£000 £000 £000
Balance brought forward 569 388 957
Credit to income statement 286 (140) 146
Total deferred tax asset at end of year 855 248 1,103
At 31 March 2024 there was a total of unprovided deferred tax assets of
£1,863,000 (2023 - £471,000) of which £1,391,000 relates to tax losses
(2023 - £Nil) and £471,000 in relation to fixed asset timing differences
(2023 - £471,000).
19 Financial instruments
The following table shows the carrying amounts and fair values of financial
assets and liabilities, other than derivatives. All financial liabilities are
measured at amortised cost. The derivative liability, which is measured at
fair value, is level 2 in the fair value hierarchy.
2024 2023
£000 £000
Category of financial instruments
Carrying value of financial assets:
Cash and cash equivalents 284 7,575
Trade and other receivables 3,486 3,196
Total financial assets 3,770 10,771
Carrying value of financial liabilities:
Trade and other payables (11,853) (10,992)
Bank and other borrowings (2,327) (1,410)
Derivative financial instruments (36) (65)
Lease liabilities (9,861) (6,876)
Total financial liabilities (24,077) (19,343)
The fair value and carrying value of financial instruments have been assessed
and there is deemed to be no material differences between fair value and
carrying value.
The cash and cash equivalents are held with bank and financial institution
counterparties, which are rated P-1 and A-1, based on Moody's ratings.
20 Share capital and reserves
2024 2023
£000 £000
Share capital - allotted, called up and fully paid
124,230,905 ordinary shares of 0.3 pence each (31 March 2023: 124,230,905) 373 373
Share premium 10,315 10,315
Share capital
The issued share capital at 31 March 2024 comprised 124,230,905 ordinary
shares of 0.3 pence each with a nominal value of £372,693. The company has
one class of ordinary share which have equal rights, preferences and
restrictions.
Share premium
The share premium reserve contains the premium arising on the issue of equity
shares above their nominal value, net of issue expenses incurred by the
Company. The 6,583,851 ordinary shares of 0.3 pence each with a nominal value
of £19,752 on 28 July 2017 were issued at a price of 161 pence per share
giving rise to a share premium of £10,315,248 (net of expenses).
Merger reserve
The merger reserve arose on the purchase of certain subsidiaries. The merger
reserve represents the difference between the cost value of the shares
acquired less the cost value of the shares issued for the purchase of each
company and the stamp duty payable in respect of these transactions.
Retained earnings
The movement on retained earnings is as set out in the statement of changes in
equity. Retained earnings represent cumulative profits or losses, net of
dividends and other adjustments.
21 Change in liabilities arising from financing activities
2023 Cash flow Non-cash 2024
changes
£000 £000 £000 £000
Cash at bank and in hand 7,575 (7,286) (5) 284
Net cash per statement of cash flows 7,575 (7,286) (5) 284
Borrowings - overdraft - (581) - (581)
Borrowings - loan (1,410) (336) - (1,746)
Net cash before lease liabilities 6,165 (8,203) (5) (2,043)
Lease liabilities (6,876) 2,874 (5,859) (9,861)
Net debt after lease liabilities (711) (5,329) (5,864) (11,904)
Non-cash changes relate to the translation of foreign currency balances at the
end of the period and lease additions, disposals and modifications.
22 Cash and cash equivalents
2024 2023
£000 £000
Cash at bank and in hand 284 7,575
Net cash at bank and in hand 284 7,575
23 Financial commitments
Capital commitments
The Group had £0.2 million of capital commitments of at 31 March 2024 (FY
2023: £1.9 million) which were not provided for in the financial statements.
24 Related party transactions
The Group considers its Executive and Non-Executive Directors as key
management and therefore has a related party relationship with them. Two
Directors, Tarak Ramzan and his son Sheraz Ramzan, and their relatives control
48.7% of the voting shares of the Company (2023: 48.7%).
The Group transacts with companies in which Tarak and Sheraz Ramzan have an
interest. The amounts of the transactions and balances due to and from the
related parties during the year and at the year-end are:
Purchases from `Balance owed to
Balances due from
2024 2023 2024 2023 2024 2023
£000 £000 £000 £000 £000 £000
Big Blue Concepts Limited 375 344 - - - 35
Tarak Manufacturing Limited 263 241 - - - -
Ocean 9 Limited 30 39 - - - -
The charges from Big Blue Concepts Limited and Tarak Manufacturing Limited
solely relate to the rental of the Group's distribution centre and head office
respectively. These leases were entered into further to the Independent
Non-Executive Directors of the Company having received independent legal
advice and independent commercial real estate advice and being satisfied that
they reflect arm's length legal and commercial terms.
The charges from Ocean 9 Limited relate to consultancy fees payable to the
spouse of one of Tarak Ramzan's children for the provision of property advice.
25 Contingent Liability
Subsequent to the year end the Company received a claim letter from a
supplier of IT software in relation to a contract for services entered into
February 2020. Further to the provision of initial advice from Kings Counsel,
the Group does not consider that any monies are due under this contract and as
such does not accept any liability in respect of this matter. The
potential claim amounts to £673,000 plus VAT with the potential for
interest of £573,000 to be sought on this amount.
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