Budget footwear retailer Shoe Zone has issued a profit warning, significantly slashing its profit forecast for the financial year. The company cited challenging trading conditions in June and July, primarily driven by a further weakening of consumer confidence following the government’s October 2024 Budget announcement. This has led to reduced discretionary spending, impacting footfall and consequently, revenue and profit.
Profit Forecast Halved Amidst Economic Headwinds
Shoe Zone now anticipates its adjusted profit before tax for the financial year ending 27 September to be approximately £2.5 million. This represents a substantial reduction from its previous prediction of £5 million. In light of these trading pressures, the company has also decided to withdraw its current dividend policy.
- Adjusted profit before tax forecast reduced from £5m to £2.5m.
- Dividend policy withdrawn due to trading difficulties.
Factors Affecting Performance
The retailer attributes the downturn to a combination of factors. Persistent inflation, elevated interest rates, and increased incentives for saving have collectively dampened consumer spending on non-essential items. This economic climate has directly translated into lower footfall across its stores, impacting sales volumes.
Company’s Strategic Outlook
Despite the current challenges, Shoe Zone management remains confident in the company’s underlying strategy. This confidence is underscored by the recent opening of its 200th new-format store. The company also highlighted its strong financial position, noting that it remains debt-free and has higher cash levels compared to the same period last year.
Shoe Zone operates a significant retail estate comprising 271 stores across the UK, including 74 original high street shops and 198 larger-format outlets. These newer stores feature brands such as Skechers, Hush Puppies, Rieker, and Lilley & Skinner. The company sells approximately 13.3 million pairs of shoes annually at an average price of £13, offering a multi-channel approach through its physical stores and digital operations.
Sources
- Budget retailer Shoe Zone issues profit warning, FashionNetwork.com.
- Shoe Zone halves profit forecast amid weak consumer confidence, Retail Sector.
