QS forced to refinance after £25m loss and falling sales

In results filed at Companies House, the retailer revealed it had breached a banking covenant after it made the loss in the year to March 29.

Sales at the retailer, which is owned by Indian company Grabal Alok, fell from£99.4 million to£94.7 million during the period. Net cash outflow from operating activities was£33.9 million.

In the statement, auditor Baker Tilly UK said these conditions “indicate the existence of a material uncertainty that may cast doubt about the company’s ability to continue as a going concern”, although in a statement Grabal Alok insisted the covenants were being met.

The loss meant QS broke one of four bank loan covenants at the year end. It is renegotiating revised covenants with HSBC. Approval has already been secured from lenders representing 50 per cent of the loan.

QS vice-chairman and European chief executive Findlay Caudwell said the breached covenant was “not an issue” and that Grabal Alok is committed to continuing investment.

Caudwell said last year was a transition period for the 212-store group and is confident of “significant improvement” as it focuses on growth.

During the year the retailer benefited from a£35 million investment by Alok and will have a minimum£5 million injection this year to overhaul stores.

> Value clothing retailer MK One has hired its former merchandise director Dolly Deacock as buying director. Deacock rejoins the retailer after leaving following Baugur’s takeover in 2004. She has spent more than 20 years at the company.