Quiz (LSE: QUIZ) is the latest fashion retailer to join AIM. Like recent fellow fashion floats Boohoo.com and Joules, it made quite a splash on its debut. Its shares soared as high as 23% above the IPO price during the first day of trading on Friday.
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Quiz’s biz
Quiz describes itself as “an established and distinctive omnichannel and international own brand in the women’s value fast fashion sector [with] a focus on occasion wear and dressy casualwear primarily for 16-to-35 year-olds.”
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The group has 73 standalone stores and 165 concessions in the UK and Ireland and 65 international franchise stores, concessions and wholesale partners in 19 countries. It also operates online through its website and apps.
Share price movements
Before considering such things as revenue and valuation, let’s have a quick look at Quiz purely in terms of the post-IPO share price movements of its predecessors Joules and Boohoo:
| Admission date | IPO price (p) | First day closing price (p) | Subsequent low price (p) | Current price (p) | |
| Quiz | July 2017 | 161 | 190 | 190 | 190 |
| Joules | May 2016 | 160 | 194 | 163 | 301 |
| Boohoo | March 2014 | 50 | 70 | 22 | 234 |
Joules and Boohoo saw big rises on the first day of trading. However, in both cases you could have subsequently picked up their shares cheaper. And, in the case of Boohoo, cheaper than the IPO price. On this basis, it may be over-early to pay as much as 190p for Quiz’s shares.
Growth
The fact that pureplay online retailers like Boohoo are commanding much higher valuations than multi-channel operators like Joules and Quiz appears not to have been lost on the latter’s management and advisors.
Quiz’s AIM admission document contained three times as many mentions of the words “e-commerce”, “online”, “digital” and “mobile” as Joules’ did (a total of 126 versus 42). The table below, showing online revenue as a percentage of total revenue, provides something of a reality check.
| 2013 | 2014 | 2015 | 2016 | 2017 | |
| Quiz (%) | 6.1 | 9.2 | 9.6 | 11.4 | 13.3 |
| Joules (%) | 20.5 | 25.0 | 22.2 | 22.9 | 24.8 |
| Boohoo (%) | 100 | 100 | 100 | 100 | 100 |
While Quiz believes it can grow online revenue to 35% in the medium term, such a target also appears well within the grasp of Joules. I’ll also note that despite Quiz’s proportion of online revenue expanding more rapidly than Joules’ over the last five years (as shown in the table above), the latter’s total revenue has increased at a faster compound annual growth rate (CAGR) than Quiz’s, as shown in the table below.
| 2013 | 2014 | 2015 | 2016 | 2017 | CAGR 2013-17 | |
| Quiz (£m) | 47.9 | 53.0 | 61.3 | 69.3 | 89.8 | 17.0% |
| Joules (£m) | 77.5 | 95.6 | 116.4 | 131.3 | 157.0 | 19.3% |
| Boohoo (£m) | 67.3 | 109.8 | 139.9 | 195.4 | 294.6 | 44.6% |
Valuation
Boohoo’s growth is streets ahead of its multi-channel rivals and we should not be surprised if it rates at a significantly higher valuation. I would suggest Quiz merits a rating somewhere on a par with Joules. The table below shows some price-to-sales (P/S) ratios for the three companies — the P/S being, in my view, an appropriate valuation measure at this stage for these fast-growing, land-grabbing businesses.
| P/S at IPO price | P/S at first day price | P/S at current price | |
| Quiz | 2.2 | 2.6 | 2.6 |
| Joules | 1.1 | 1.3 | 1.7 |
| Boohoo | 5.1 | 7.2 | 9.1 |
Quiz looks a decent business with good prospects. However, I can’t see it merits a sizeable premium to Joules on current evidence. I suspect that, as we’ve seen in the past, investors are showing a bit of initial over-excitement about a market newcomer and that you’ll be able to pick up Quiz’s shares below 190p in the coming months.
