Shoe Zone shares tumble after retailer reveals profits have slumped 38%
Share:
Shares of the high street mainstay Shoe Zone took a nosedive after the retailer disclosed a steep drop in annual sales and profits. The Leicester-based chain, employing roughly 2,250 staff across 297 UK outlets, endured a 38% plunge in pre-tax profits to £16.2m for the year ending September 28, coinciding with a 2.7% decrease in sales to £161.3m.
Shares tumbled another 10% during Tuesday morning trading following the announcement which arrives on the heels of two profit warnings in recent months. The dip in profits has been attributed by Shoe Zone to escalating expenses for shipping, energy, wages, and store refurbishments—as well as the impact of 26 net store closures over the year.
Chairman Charles Smith said: "The year-on-year reduction is primarily due to the challenging second half trading environment, as a result of unseasonal weather conditions, particularly in peak summer, higher container prices, higher energy costs, higher depreciation charges due to increased capital expenditure, and higher wage costs due to the National Living Wage increase.
"We continue to actively reduce our cost base in all areas of the business and have reduced our rent bill through proactive discussions with landlords with further savings on renewals.". In light of recent Budget measures, Shoe Zone had reported an acceleration in planned store shutdowns last month. The group has stated that the Chancellor's decision to raise employers' national insurance contributions and increase the minimum wage has resulted in "significant additional costs".
