Growth-focused investors should keep the faith with fast-fashion brand Quiz (QUIZ:AIM) and buy at 173.5p. Broker Panmure Gordon reckons you could make just over 25% profit in the next 12 months with a 219p price target.

In a generally gloomy retail sector, we see scope for upgrades at the rapidly expanding occasion-to-dressy casual wear purveyor, whose brand benefits from celebrity collaborations and a marketing boost from social media influencers.

Full year results (5 Jun) from Glasgow-based Quiz revealed 30% group revenue growth to £116.4m, driven by strong growth across all channels. Gross margin was north of 60%, underlying pre-tax profit rose 20% to £9.8m and Quiz declared a 0.8p dividend payment.

Operational highlights included rapid growth in the active online customer base, up 87% to 370,000. Online revenue grew by 158% to £30.6m, driven by own site sales and ‘exceptional demand’ for the brand across third party sites including Next (NXT) and first international online partner Zalando.

Quiz is extending the product range online, with recent successful examples including the Curve, Bridal and Quizman ranges.

The results reveal that Quiz currently operates 71 standalone stores and 147 concessions in the UK, including concessions in ailing department stores Debenhams (DEB) and House of Fraser.

Yet encouragingly, at a time when many retailers are closing stores, Quiz sees scope for more stores and is even looking to open slightly bigger outlets to accommodate a broader product range.

The business has been investing heavily in marketing which partially explains why profit growth hasn’t matched the pace of revenue growth. Another reason is higher commission costs as a result of a greater proportion of sales being made through third parties. These have a higher cost to serve than sales generated through its own websites.

April proved a tough month as UK retail sector footfall softened, hurting Quiz’s UK stores and concessions. However the company experienced a strong recovery in May, attesting to the growing appeal of the Quiz brand.

Management are also excited about the opportunity in the US, where the brand sells in a number of stores including New York department store Lord and Taylor and a US website has also been launched.

For the year to March 2019, Panmure Gordon forecasts a surge in adjusted pre-tax profit to £12m for earnings of 7.4p, ahead of £15.1m and 9.4p for financial year 2020.

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