Store closures hit UK's Shoe Zone's H1 results, digital sales up 6.4%
British footwear retailer Shoe Zone plc has reported its interim results for the first half (H1) of fiscal 2025 (FY25) ended March 29, posting revenue of £71.5 million (~$96.53 million), down 6.5 per cent year-over-year (YoY). The gross profit dropped to £11 million with a margin of 15.4 per cent, impacted by lower product margins, higher container costs, and promotional activity.
The decline was largely due to the closure of 31 stores, with store revenue falling to £53.3 million from £59.4 million. However, digital revenue rose by 6.4 per cent to £18.2 million, supported by strong online performance and the introduction of free next-day delivery at its official website.
Shoe Zone plc has reported H1 FY25 revenue of £71.5 million (~$96.53 million), down 6.5 per cent YoY, with a £2.3 million pre-tax loss due to store closures, lower margins, and rising costs. Digital sales rose 6.4 per cent. The retailer ended the period with 278 stores and £1.7 million net cash. FY25 profit forecast was halved to £5 million amid tough trading, though improvements are expected in H2.
The group recorded a loss before tax of £2.3 million, and adjusted loss before tax stood at £2.6 million against a profit of £2.5 million in H1 FY24, reflecting a foreign exchange gain of £0.3 million. Administration expenses rose to £9.7 million, mainly due to store impairments and increased digital and head office costs, while distribution costs remained steady at £2.8 million.
The company ended the period with 278 stores, including 187 new format and 91 original format stores, and a net cash balance of £1.7 million. Capital expenditure was £1 million, significantly lower than the £5.3 million spent in H1 2024, with investments weighted towards the second half of the year. Lease renewals delivered annualised savings of £0.2 million, and the average lease length increased to 2.5 years.
The company continues to invest in its digital platform and head office infrastructure. Capital expenditure for the current year is expected to be approximately £6 million, lower than the previous year due to the later timing of projects. However, investment will remain at elevated levels until the full estate of approximately 260 stores is converted, Shoe Zone said in a press release.
For full FY25, Shoe Zone has revised profit before tax down to £5 million from £10 million predicted earlier, reflecting a challenging first quarter marked by weak consumer confidence and unseasonal weather. Additional costs related to national insurance and national living wage increases, stemming from the October 2024 budget, are also expected to impact the second half of the financial year.
Although trading conditions remain difficult due to low consumer confidence, the second quarter has shown signs of improvement. More stable container prices and a strengthening of sterling against the dollar are expected to provide financial benefits in the latter half of the year, added the release.
Fibre2Fashion News Desk (SG)
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