Shoe Zone Plc, the UK-based off-price retailer, said it expects adjusted earnings before taxes to decline 76.0 percent in its fiscal year ended September 28, as sales dropped 7.6 percent and container prices increased.
Revenue for FY2025 was £149.1 million ($199 mm), down from £161.3 million a year ago. The company attributed the decline to “a decline in consumer confidence and the general negativity in the UK, as well as trading out of 28 fewer stores. However, the key weeks of back-to-school trade aligned with expectations, with Digital revenue up 2.3 percent year-on-year.”
Product margin dropped to 61.0 percent from 62.8 percent. This was mainly due to higher container prices in the first half of the year and a February 2025 ‘Buy One Get One Free’ promotion. Container prices began to fall after the Chinese New Year and started to benefit at the end of the second half of the financial year.
Profit before tax is expected to be approximately £3.3 million, down from £10.1 million a year ago. Adjusting for a £0.9 million foreign exchange revaluation gain, therefore, the adjusted profit before tax will be approximately £2.4 million, down from £10.0 million a year ago. The reduction, compared to FY2024, is due to lower sales, year-on-year increases in National Insurance, depreciation, the National Living Wage, and first-half container prices.
Charles Smith, company chairman, stated, “This was a challenging year, particularly in the second half, as consumer confidence fell following the Government’s October 2024 budget, with persistent inflation, higher interest rates and reduced levels of disposable income all contributing to general negative economic and consumer sentiment in the UK. Sales were good when there was a clear reason to buy, such as the warm summer and the Back-to-School season. However, overall discretionary spending remains subdued as consumers exercise greater caution in their expenditure.
“Digital revenue outperformed last year and the ongoing strategy of refitting and relocating stores to our larger format continued, with 201 conversions completed, alongside net cash levels improving year-on-year,” continued Smith.
Shoe Zone ended the year with net cash of c.£6.0 million, up from £3.7 million a year ago. The increase in the net cash balance was due to lower capital spend and lower intake costs, offset by lower revenue.
Shoe Zone’s store count shrank to 269 from 297 at the close of the prior year. The retailer closed 39 stores, opened 11 and refitted 6. The portfolio comprises 201 larger-format stores and 68 original High Street stores. Shoe Zone said it is continuing its strategy to expand the number of new format stores through relocations and refits of existing High Street stores.
Looking ahead, Shoe Zone said it remains cautious about the near-term outlook, with trading conditions expected to remain subdued. “We continue to monitor the macro-economic environment closely and await the outcome of the November UK Budget in the coming weeks. The Board is actively managing cash, which continues to remain healthy, providing resilience and flexibility in the coming months,” the company stated.
Image courtesy Shoe Zone
