Quiz is to appoint administrators to its wholly-owned subsidiary that operates the UK fashion brand’s 82 standalone stores in the UK and the Republic of Ireland.
In a statement today (10 June), Quiz said it will seek the appointment of joint administrators from KPMG to Kast Retail Limited. Kast’s subsidiary, Kast International Spain SL, operates the group’s three stores in Spain.
As part of its bid to restructure its standalone retail store portfolio, Quiz then plans to acquire the business and certain assets of Kast for a cash consideration of GBP1.3m (US$1.7m) through its subsidiary Zandra Retail Limited, acting through its administrators.
Zandra will also enter into new leases of Quiz’s Glasgow head office and Bellshill distribution centre, both of which Kast is the tenant in addition to operating the group’s retail store portfolio.
Quiz said its board believes the proposed restructuring will enable the group to operate an economically viable store portfolio alongside its online, UK concession, and international channels, which are unaffected by the announcement.
Despite efforts to address the performance of its stores, including renegotiating rents on the expiry of leases, Quiz’s store estate has been loss-making in the last year.
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By GlobalDataThe company said its standalone stores have experienced increasing trading pressures as a result of the enforced closure of all UK and Irish stores since 22 March in accordance with UK Government guidance, coupled with the accelerating shift in consumer behaviour towards online shopping.
It also cited difficulty in renegotiating reductions to the high levels of rents and rates and a sustained period of macro-economic uncertainty in the UK, which has impacted consumer spending.
“It is with deep sadness and regret for some of our colleagues and partners that we had to take this decision to restructure the group’s operations. Physical retail in the UK was facing a major structural challenge prior to the outbreak of Covid-19 with the economics of operating stores on traditional leases becoming increasingly difficult,” says Tarak Ramzan, CEO of Quiz.
He adds while the firm has taken pro-active actions over the past 18 months to drive footfall to stores and renegotiate leases, the significant economic uncertainty it now faces has led to the decision in order to ensure a sustainable future for the group.
“We continue to believe that stores, with appropriate property costs and flexible lease terms, can continue to be a relevant pillar in our omnichannel model and we will be seeking to re-open Covid-19 stores where we believe it is prudent and economic to do so. We believe that with an appropriately structured store estate in combination with our capital-light concession model, international channel and online focus Quiz will be better positioned for all its stakeholders over the long-term.”
Occasionwear specialism deems Quiz irrelevant
Pippa Stephens, retail analyst at data and analytics company GlobalData notes Quiz’s physical locations were already in trouble before the outbreak of Covid-19 and three months’ worth of store closures across its estate has taken its toll, with the retailer now struggling to pay all of its store costs.
“While the administration of its store subsidiary Kast Retail will enable Quiz to renegotiate leases, it brings bad news for its landlords who will be left with little choice but to agree to rent cuts, or else risk losing out on payments entirely.”
Stephens adds Quiz’s product range will have caused it to suffer more than other clothing specialists throughout the pandemic, as its reliance on occasionwear will have deemed it irrelevant as events like weddings and proms have been cancelled or postponed during lockdown.
“Its key competitors boohoo.com and PrettyLittleThing have adapted their ranges to capitalise on consumers’ desire for loungewear, while also perfectly positioned for consumers’ shift towards purchasing clothing online. With store closures on the horizon, Quiz must also aim to drive further spend through its online channel in the long term, by making its website more visually appealing, and offering more affordable delivery options.”
Earlier this year, Quiz warned its full-year results are likely to be impacted by the coronavirus outbreak as it experiences a “substantial reduction to traffic in stores and online.”
