Fashion Retailer on Brink of Collapse
The once-thriving fashion chain Quiz is on the verge of a drastic overhaul, with plans to shut down up to a third of its stores across the country. This move, led by the founding Ramzan family, marks a dismal end to the retailer’s stint on the stock market, resulting in significant losses for many shareholders.
Store Closures Loom
The potential closures would not only lead to hundreds of job losses but also exacerbate the sense of gloom that has enveloped the high street. Quiz currently operates around 60 outlets, employing roughly 1,500 people. To revive its fortunes, the company has enlisted the help of restructuring experts at Teneo, who are exploring various options, including a pre-pack administration and a company voluntary arrangement (CVA).
Cost-Cutting Measures
The Ramzan family, led by Sheraz Ramzan, who took the reins as CEO last March, is keen to eliminate the chain’s worst-performing stores to reduce costs and stem the decline. This move is likely to be met with resistance from landlords, who will be affected by the closures.
Financial Woes
Quiz’s troubles came to a head in the run-up to Christmas, with a series of announcements that sent shockwaves through the investor community. The company revealed it was on the brink of running out of cash, citing a slump in sales both in-store and online. This was followed by plans to de-list from the London stock exchange and go private.
A Miserable Few Years
Quiz’s shares began trading on the AIM junior market at 161p in 2017, raising over £90m for its founders. However, following multiple setbacks, the shares plummeted to less than 20p in under two years and are currently trading for less than a penny.
Emergency Funding
In the summer, with liquidity dwindling, bosses sought an emergency £1m loan from Sheraz’s father, Tarak, who founded Quiz as a single store in Glasgow in 1993. At the time, the retailer had liquidity of just £2.3m, comprising £400,000 cash and £1.9m of undrawn banking facilities provided by HSBC.
Urgent Need for Financing
With HSBC reportedly reluctant to continue funding the business, alternative sources of financing are being urgently sought as part of any turnaround plan. Any new loans are expected to come with more stringent terms than the existing borrowings.
Mounting Losses
Quiz racked up losses of nearly £7m last year, a stark contrast to the £2.3m profit it generated the previous year. As the retailer teeters on the brink of collapse, one thing is clear: drastic measures are needed to revive its fortunes.
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