Expansion drive bites into Shoe Zone profit

UK value footwear retailer Shoe Zone announced on Wednesday its preliminary results for the year ended 30 September, revealing declines in revenue and profit following continued investment in its store estate.

Shoe Zone's store refitting programme and planned closures hit profits in the year to 30 September

The company opened 21 new stores during the period, including six with the Big Box format, and refurbished a further 29 locations. It also closed an undisclosed number of loss-making stores.

This led to annual revenues declining to £157.8m from £159.8m a year earlier, while statutory profit before tax fell to £9.5m from £10.3m, primarily due to the adverse impact of foreign exchange on imported goods into the UK.

There are some good news in the report too, with the company improving its average transaction value by 3.3% during the year. Footwear orders placed directly with overseas factories increased to 84.7% from 72.2% in 2016, and non-core, non-footwear ranges continued to improve and now generate sales of £8m, up 14.5% on the prior period.

Additionally, Shoe Zone’s ecommerce channel is gaining traction with multichannel revenue up 34% to £2m. And Shoe Zone products are now also available in the US via Amazon Marketplace, joining continuing presence in France, Germany, Spain and Italy.

Chief executive Nick Davis commented: “I am pleased with the group’s performance in what continues to be a challenging retail environment. We are still well positioned in the market given our strong value retail proposition and continue to manage our store portfolio successfully through our ongoing store rationalisation and refit programme. Following a successful trial of the Big Box concept during 2017, we are now targeting 10 new Big Box stores per year in the medium term.”

With its value proposition, Shoe Zone is likely to be one of the few retailers going through the current consumer backdrop relatively unscathed. This has been confirmed by Davis, who said the group has made a “solid start” to the new year with trading in line with expectations.

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