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Quiz plc – emphasises “Strong trading across the Group's omni-channel business model”, so why a muted share price response?

By Steve Moore | Wednesday 10 January 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

A “Christmas Trading Update” from Quiz plc (QUIZ) is headlined “Strong trading across the Group's omni-channel business model”, yet from a 161p per share July AIM listing and almost 190p re-reached in October, the shares are currently little changed at around 150p. Hmmm…

The update notes online revenue increasing by 119%, with overall “Christmas trading was in line with expectations with a 31.9% (31.2% constant currency) increase in group revenue for the seven-week period from 19 November 2017 to 6 January 2018 against the comparable period last year” and “gross margins in the period were in line with expectations”.

It adds “the group's UK standalone stores and concessions also performed strongly with sales increasing by 11.6%” and “international sales increased by 51.1% (46.9% in constant currency)”. What about on a like-for-like basis?

It is stated that “the UK stores' and concessions' retail square footage as at 6 January 2018 was 192,000 sq. ft. (January 2017: 185,000 sq. ft.)” (i.e. +3.8%), though on international only “the growth reflects increased sales through our franchise partners, the introduction of our first three stores in Spain and strong revenue growth from our Irish stores and concessions”. Hmmm.

It is emphasised “we continue to look forward with confidence”, but I noted previously talk of a full-year trading beat – and that’s the hope a price/earnings multiple of well above 20x looked to contain. With this valuation of this recent listing thus already looking to discount continued significant growth from what is a competitive space (fast-fashion womenswear) and amidst elevated economic uncertainty, I currently continue to avoid.

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