Scottish fashion retailer Quiz Clothing is quitting the stock market and re-registering as a private company to cut costs.
The move follows a strategic review initiated at the end of 2023 in a continued difficult trading environment and a weak share price performance.
The directors believe that cancellation will be in the best interests of the company and its shareholders in view of the “considerable cost, management time and the legal and regulatory burden associated with maintaining the company’s admission to trading on AIM.”
Shareholders were receiving a circular today calling a general meeting on 8 January in Glasgow to cancel its shares quoted on the Alternative Investment Market.
If approved by at least 75% of the votes cast the cancellation will become effective on 23 January and all non-executive directors will resign.
Gerry Sweeney, chief financial officer and company secretary, intends to step down but will remain with the company until 31 March to ensure a transition of responsibilities to his successor as stated in a company announcement on 11 October.
The company, which has more than 60 stores and 40 concessions in the UK, has received irrevocable undertakings in favour of the proposal from all directors and family members of Tarak Ramzan, the group’s founder, including Nusrat Ramzan, Kasim Akram, Omar Aziz, Haris Ramzan and Mussarat Ramzan.
It is also backed by Tajveer Gill and Amraj Gill in respect of 21.6 million shares in which they are legally and beneficially interested. In total, the motion already has support accounting for 66.74% of the company’s issued share capital.
The board says costs are associated with maintaining the admission of the shares, such as a nominated adviser and broker fees, London Stock Exchange fees as well as the costs of being a quoted company are “in the board’s opinion, disproportionately high, compared to the benefits.”
The directors say the time and cost savings associated with the cancellation and re-registration could be “better utilised for the benefit of the company providing an extended cash runway to capitalise on growth opportunities”.
The board believes it is more appropriate and practical to undergo any changes as a private limited company “without the constraints of announcement obligations and significant confidentiality constraints”.
It says macro-economic factors including cost inflationary pressures and low consumer confidence have “cultivated a difficult trading environment”, with the company experiencing declines in traffic both in-store and online in recent years.
The expected impact of post-Budget higher payroll costs has provided an uncertain economic outlook for the company, amidst an increasingly competitive fast-fashion retail landscape.
The company says low trading volumes in the shares has negatively affected the share price of Quiz and therefore its market capitalisation, which the directors do not believe accurately reflects potential or underlying prospects of the business.
Tarak Ramzan, the majority shareholder with a 20.38% shareholding has proposed to provide a £1 million loan facility to provide additional liquidity headroom for working capital purposes.
However, this remains subject to approval from the group’s main lender. Subject to trading and /or provision of this loan, the group anticipates that additional funding will be required in the first quarter of 2025 but believe that staying on AIM is not likely to provide significant additional or more cost effective options for funding.
The company will arrange for a Matched Bargain Facility to be put in place ahead of cancellation to enable shareholders to trade in the ordinary shares. This would be provided by JP Jenkins. JP Jenkins is an appointed representative of Prosper Capital, which is authorised and regulated by the FCA.
Difficult trading history
Daily Business revealed Quiz’s intention to float in April 2017 and its shares were admitted to trading on AIM in July 2017.
The group’s revenue grew from £89.8m at the time of IPO to £130.8m in 2019.
Following the significant impact of Covid on the group’s revenue from 2020 and subsequent restructuring of its store portfolio, revenues partially recovered and grew to £91.7m in the year ended 31 March 2023.
Subsequently, customer demand was impacted by the widely reported cost of living and inflationary pressures with revenue declining to £82m during the 2024 financial year with the group generating a loss in comparison to a profit in the prior period.
Given the ongoing decline in customer demand, revenue in the year ended 31 March 2025 is expected to be below 2024 revenue.
