The last news we had from budget footwear and accessories retailer Shoe Zone was a profit warning during August as it said June and July had been tough. So as it issued a full-year update on Thursday morning, has anything improved?
Shoe Zone
A little perhaps, but it’s still tough out there. Along with its figures for the year to late September, the company said it continues “to be cautious about the near-term outlook, with trading conditions expected to remain subdued. We continue to monitor the macroeconomic environment closely and await the outcome of the November UK Budget in the coming weeks. The board is actively managing cash, which continues to remain healthy, providing resilience and flexibility in the coming months”.
So let’s look at the full-year numbers. Revenue fell by 7.6% to £149.1 million but that was particles by the fact that store numbers reduced to 269 from 297 a year before. The product margin dropped to 61% from 62.8% and adjusted profit before tax is expected to be approximately £2.4 million, down from £10 million a year earlier.
The company said that revenue drop was due to “a decline in consumer confidence and the general negativity in the UK, as well as trading out of 28 fewer stores. However, the key weeks of Back-to-School trade were in line with expectations, with digital revenue up 2.3% year-on-year”.
The falling product margin came on the back of higher container prices for the first half of the year, and its February 2025 ‘Buy one get one free’ promotion. Container prices started to fall after Chinese New Year, and started to benefit it at the end of the second half of the financial year.
It added that the lower profit this time (when a foreign exchange revaluation gain of £0.9 million is excluded) is due to the sales reduction, year-on-year increases in National insurance, depreciation, the National Living Wage and those first-half container prices.
Chairman Charles Smith said it was “a challenging year, particularly in the second half, as consumer confidence fell, with persistent inflation, higher interest rates and reduced levels of disposable income all contributing to general negative economic and consumer sentiment in the UK. Sales were good when there was a clear reason to buy, such as the warm summer and the Back-To-School season. However, overall discretionary spending remains subdued as consumers exercise greater caution in their expenditure”.
But he added that digital revenue outperformed last year and the ongoing strategy of refitting and relocating stores to its larger format continued, with 201 conversions completed, alongside net cash levels improving year-on-year.
