GLASGOW-BASED fashion retailer Quiz has made its second profit warning in just three months, after the festive season proved to be below expectations.
Estimations of profits for the 2019 financial year have been lowered from £11.5 million in October to £8.2m.
Revenue is set to come in around £133m, short of market expectations.
The company said heavy discounting was responsible for the cut in forecasts.
Shares slumped by 33% in London trading following the announcement.
The store has 70 outlets and 148 concessions across the UK.
Gross margins are expected to be 60.5% in the six months to March 31, 2019, down from 62% in the six months to September 30.
Despite the profit warning, Quiz reported an 8.4% rise in revenue for Christmas trading, between November 25 and January 5.
And their online revenue increased by 34.1% over the same time frame.
Tarak Ramzan, Quiz’s chief executive, said: “Quiz has delivered further revenue growth over the Christmas period driven by the performance of our own websites.
“However, the growth and the margin achieved have been below our initial expectations and, consequently, the board considers it appropriate to revise its sales and profit expectations for the current year.”
“Management’s utmost priority remains achieving further growth for the business and improving profitability in the future.”
Neil Wilson, an analyst at Markets.com, said: “Quiz became the latest high street casualty as its shares plummeted on a profits warning.
“Overall performance isn’t bad at all – sales rose more than 8.4%, led by a 34.1% jump in online revenues.
“But we got a bad profits warning. It looks like discounting is really killing retailers.
“There is just no way they can pass on higher costs by raising prices.
“Consumers are simply not prepared to pay more.
“The discounting vicious circle means shoppers are now expecting big price reductions.
“Margins at Quiz are like others coming under a lot of pressure from heavy discounting.”
Concerns over Brexit and a decrease in consumer confidence have been blamed for the worst Christmas in 10 years for retailers, as sales growth dropped to zero in December for the first time since 2008.
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