Shoe Zone reports a 42% drop in profits due to weak consumer demand and rising costs.
- The budget footwear retailer experienced a 2.7% decline in revenue for the year ending 28 September.
- Unseasonable weather and increased operational costs significantly impacted Shoe Zone’s financial performance.
- Despite setbacks, the company’s digital sales grew, benefitting from new delivery services.
- Continued store revamps resulted in a net reduction of 26 locations, now totalling 297.
Shoe Zone has announced a significant decline in its profits, attributing a 42% drop to reduced consumer demand and escalating costs. For the financial year concluding on 28 September, the company’s revenue decreased by 2.7%, falling from £165.7m to £161.3m. Several factors, including unseasonably wet weather and increased expenses linked to energy, depreciation, the National Living Wage, and container prices, were pivotal in this downturn.
The company’s share price reflected the financial challenges, experiencing a decline of over 10% in early trading and nearly 19% over the past month, with a reduction exceeding one-third for the year. However, there was a positive note during the pivotal ‘back to school’ trading period in August and September, where sales surpassed those of the previous year despite other adversities.
Shoe Zone is currently engaged in a comprehensive store revamp strategy, which has resulted in the closure of 53 stores and the opening of 27 new ones over the year. The firm has refitted 28 stores, achieving a net reduction to 297 locations.
The company’s Chairman, Charles Smith, characterised the fiscal year as ‘a year of two halves,’ highlighting a stronger first half and an underperforming second half due to summer weather conditions. He noted the impressive performance during the ‘back to school’ period, which exceeded expectations, and acknowledged the continued growth of the digital business, supported by the introduction of free next day delivery.
Earlier in the year, Shoe Zone had issued a warning of below-expectation trading performance, citing higher-than-anticipated costs stemming from disruptions in the Red Sea and sluggish autumn trading. This prior caution aligned with the eventual profit and revenue results.
Overall, Shoe Zone continues to navigate a challenging retail environment with a focus on digital growth and store optimisation.
