Shoe Zone shares fall 20% with huge losses unveiled
Shoe Zone shares fell more than 20 per cent on Wednesday with the group posting a loss for its first half.
Having issued a warning over its profits in December, the embattled retailer said trading ‘continues to be difficult as consumer confidence continues to be low.’
Shoe Zone reported a 6.5 per cent drop in revenue to £71.5million for the 26 weeks to 29 March, with store revenue falling 10.3 per cent to £53.3million and digital revenue rising 6.4 per cent to £18.2million.
The retailer’s adjusted loss before tax came in at £2.6million by the end of the period, against a profit of £2.5million at the same point a year ago.
Shares in the retailer fell to a three-year low below 80p in December but had edged back up to 115p ahead of today’s update, which sent them tumbling back to around 93p.
The group said it had seen some glimmers of improvement to trading in the second quarter to date.
Struggling: Shoe Zone shares fell over 20% on Wednesday
It said: ‘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.’
The group said on Wednesday: ‘Our original full year profit before tax forecast was £10million, which was revised down to £5million.
‘This reduction was 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.
‘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.’
Dividends for investors remain suspended as the group battles to revive its fortunes and bottom line.
Shoe Zone ended the period trading out of 278 stores, which is a reduction of 31 compared to a year ago. The group said its aim was to have around 260 stores in total.
It added: ‘We are 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.’
Chairman Charles Smith, said: ‘Shoe Zone delivered a satisfactory performance in the Period against the continuing backdrop of weak consumer confidence and macro/global economic volatility.’
In December, Shoe Zone shares nosedived after the retailer slashed its full-year profit expectations in response to a ‘weakening of consumer confidence and unseasonal weather’.
The retailer slammed changes announced in the Chancellor’s Autumn Budget and said it has shut stores in response to soaring wage costs.
Russ Mould, investment director at AJ Bell, said: ‘Shoe Zone’s results have given investors the kind of sharp pain you get from blisters on your feet.
‘It has swung from a profit to loss, the dividend has been scrapped, and the outlook remains gloomy amid low consumer confidence.
‘Margins are falling and the net cash position has more than halved. Investors are voting with their feet by kicking the shares out of their portfolio.’
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