Quiz Clothing has announced that it will be appointing administrators for its standalone retail store portfolio and undergoing a restructuring process in order to protect the future of the company. Blair Nimmo and Alistair McAlinden of KPMG have been appointed as administrators to oversee the process. However, it’s important to note that only Quiz’s subsidiary, Kast Retail Limited, which operates its standalone stores in the UK and Republic of Ireland, will be going into administration. The parent company is planning to acquire the Kast business and certain assets for £1.3 million in cash. This acquisition will enable the company to continue operating its store portfolio alongside its online, concession, and international channels.
Unfortunately, Quiz’s Spanish business, Kast Spain, will no longer be under the group’s control, and the group will no longer provide services or support to it. Despite this, Quiz still believes that stores, with appropriate property costs and flexible lease terms, can play a relevant role in its omnichannel model. This move is expected to ease some of the pressures on the company, although it may face backlash from landlords and critics of pre-pack administration deals. However, the company’s lenders are supportive of this decision.
Quiz has faced numerous challenges, including lockdowns, the rise of online shopping, increasing rents, business rates, and Brexit-related uncertainty. The company has described its current store estate as financially unviable in its current structure. In the financial year ending on March 31, Kast’s revenue stood at £84.6 million, with a pre-tax profit of only £212,000.
Zandra Retail Limited, an entity related to Quiz, will be acquiring the Kast assets, with Quiz providing funding to Zandra. The majority of Kast employees, 822 out of 915, will be transferred to Zandra, resulting in approximately 100 job losses. Lease arrangements for most of the standalone Quiz stores will be renegotiated to secure flexible terms with rents that align with generated revenues. The final number of stores operated by Quiz will depend on the willingness of landlords to offer favorable lease deals, but it’s expected that some stores will close as part of the restructuring.
Quiz’s warehouse facilities will continue to be available, which is crucial for its online operations. The question now is whether the company will have enough financial resources to continue operating. As of June 9, Quiz had approximately £6 million of cash available, with additional bank facilities of £1.75 million expiring on July 31. The company is currently in talks to secure a longer-term bank facility.
CEO Tarak Ramzan acknowledged that physical retail in the UK was already facing challenges pre-Covid-19, with the economics of traditional leases becoming increasingly difficult. However, Quiz still believes that stores, with the right costs and lease terms, can play a significant role in its omnichannel model. The company intends to reopen Quiz stores where it is deemed prudent and economically viable to do so.