UK-based Shoe Zone Plc expects earnings before taxes to decline 40.7 percent in its fiscal year ended September 28 as revenues declined slightly and container prices increased.
Despite a 2.7 percent decline in revenues for the discount footwear chain, with 297 stores at the close of the fiscal year, sales during the key three weeks of the back-to-school period in August and September were positive and ahead of the same period last year. The decline in revenues, which slid to £161.3 million from £165.7 million, can be attributed to unseasonal weather in the second half of the year, particularly peak summer, and the net reduction of 26 stores over the year.
Despite the increase in container prices from March 2024 onwards, Shoe Zone Plc’s product margin is projected to increase to 62.8 percent from 62.1 percent a year ago. This increase is primarily due to lower container prices for the first half of the year. However, the margin pressures are expected to continue into the first half of 2025 due to the rising container prices.
Profit before tax is expected to be not less than £9.6 million, down from £16.2 million a year ago. Adjusting for a £100,000 foreign exchange revaluation gain, the adjusted profit before tax will be not less than £9.5 million against £16.5 million a year ago. Compared to FY2023, the reduction is due to the weather-impacted second-half sales performance in conjunction with year‐on‐year increases in energy costs, depreciation, national living wage, and container prices in the second half.
Shoe Zone ended the year with net cash of £3.7 million, down from £16.4 million a year ago. The reduction in net cash balance was due to dividends paid of £8.0 million and the continued investment in capital expenditures of gross £12.3 million, of which £9.4 million was for a store refit and relocation program. This was offset by cash generated from profitable operations.
Charles Smith, chairman, stated: “A year of two halves, with the first half trading in line with expectations and ahead of the previous year, however, the second half trading was below expectations due to unseasonal weather conditions, particularly at peak summer, however, our key Back to School period traded above expectations at the end of the year. Our Digital business continued to grow, driven by the introduction of free next-day delivery for all shoezone.com orders.
“We will provide a more detailed update at the time of our final results in January 2025. I would like to thank all of our teams for their continued commitment and hard work that have produced these results.”
Image courtesy Shoe Zone
