Shoe Zone half-year results hit by weak consumer confidence
High streets and shopping/entertainment centres may well be buzzing with activity but this doesn't always translate into hard cash for retailers with the cost of living still weighing.
A prime example is footwear retailer Shoe Zone, which saw physical store sales decline in the half-year to 29 March and now expects full-year profits to halve.
Under the circumstances, the mass-brand retailer described its performance as 'satisfactory… against the continuing backdrop of weak consumer confidence and macro/global economic volatility'. But it expects trading conditions to improve in H2.
For now, total revenues for the 26-week period fell 6.5% to £71.5 million, and store revenues dipped 10.3% to £53.3 million, although Shoe Zone noted it had traded out of 31 fewer stores compared to the previous period. Things looked to be gradually improving on the sales front because first-quarter revenues were £4.9 million lower than 2024, but Q2 revenues were just £0.1 million lower than the previous period.
A further bright spot was digital revenue increasing 6.4% to £18.2 million, boosted by the introduction of free next-day delivery on all orders.
Meanwhile, the previous year's £2.5 million profit turned into a £2.6 million loss this time around, which was in line with management expectations.
Shoe Zone ended the period trading out of 278 stores, including 91 Original stores and 187 new format spaces. And with a £6 million budget, the retailer is 'actively working to relocate and refit further stores in the second half of the year, together with a number of stores currently in the pipeline, which will open before Christmas', it noted. The ultimate goal is to have around 260 stores in total, it added.
The strategy includes opening news stores attached to five-year leases 'but still low enough to give the opportunity and flexibility to respond to changes in any retail location at short notice', it said, adding: 'Property supply continues to outstrip demand, and we continue to take advantage of this and significantly improve our property portfolio over the medium term'.
And the outlook? It's original full-year profit before tax forecast was £10 million but has been halved 'due to the challenging trading conditions we experienced, particularly in the first quarter of this financial year, due to weak consumer confidence and unseasonal weather conditions'.
It added: 'As a result of the changes announced in the October 2024 budget, we will also incur additional National Insurance and National Living Wage costs in the second half of this financial year.
'The second quarter has shown improvement, but the trading environment continues to be difficult as consumer confidence continues to be low. During the second quarter, we have seen more stability/reduction in the price of containers, and a strengthening of sterling against the dollar, both of which will start to benefit in the second half of this financial year'.
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