• UK value footwear retailer Shoe Zone has posted a rise in revenue and pre-tax profit for H1.
  • Multi-channel continued to show strong profitable growth, delivering a year on year sales increase of 21%.
  • The UK's largest value footwear retailer closed ten stores, opened four, and refitted 12 during the period.

UK value footwear retailer Shoe Zone has hailed the development of its multi-channel offering and the roll out of its Big Box store format amid an increase in both profits and revenues for the first six months of the year.

In its interim results for the period to 31 March, Shoe Zone said profit before tax reached GBP1m (US$1.34m) from GBP0.3m in the year-ago period.

Revenues were also up, climbing 1.1% to GBP73.7m from GBP72.9m last year. Multi-channel continued to show strong profitable growth, delivering a year-on-year sales increase of 21%, contributing GBP1.2m, compared to GBP1m last year.

While email revenue increased by 28.6%, mobile visits now account for 79% of total visits and and mobile revenue has grown to 69% from 66% last year. The retailer said it continues to develop mobile technology as the primary focus of its digital strategy.

Shoe Zone said the performance reflects the continued focus on driving profitable sales through its existing Shoe Zone core estate, developing its successful multi-channel offering and the roll-out of the Big Box store format. 

During the period, the UK's largest value footwear retailer continued to make progress with its strategy to roll out the new Big Box concept in a managed expansion, opening a further three Big Box stores in the first half and currently completing works on two more stores. The business remains on track to deliver ten stores by the end of the year.

In addition, it has closed ten stores, opened four, and refitted 12, bringing its portfolio to 493. Shoe Zone said loss-making stores now make up no more than 5% of its core estate, while of those remaining, the majority only make a marginal loss.

Meanwhile, product gross margin performance remained strong at 60.6%, having narrowed slightly from 62.8% in the year-ago period, due to higher write-downs early in the year and sales mix in the second quarter.

"This has been a good first half for the group, trading in line with management's expectations and achieving profitable revenue growth," said CEO Nick Davis. "Our on-going strategic focus on the property portfolio has continued to benefit the group, with careful management of leases and measured opening of core and Big Box stores, taking advantage of the favourable retail rental environment."

He added the performance also reflects the retailer's close management of costs and ability to maintain appealing key price-points and multi-buy offers for its customers.

"Trading momentum has continued into the second half, in line with expectations for the full year. With our growth strategy in place, we believe we are favourably insulated against many of the structural sector issues and the board remains confident of the outlook for Shoe Zone."

Kate Ormrod, lead analyst at GlobalData, notes as we predicted, Shoe Zone can finally boast its first H1 revenue growth since going public in 2014.

"Turning this corner will be significant for the retailer, confirming that its strategy can bear fruit, and we expect Shoe Zone to maintain its 2% share of the UK footwear market this year, despite intense pressure from Primark, which is forecast to grow its share by 0.2 percentage points," she says.

Yet, while it is making progress, Ormrod warns Shoe Zone still has a long way to go if it is to achieve market share growth.

With regards to the retailer's Big Box format, which contributed GBP3.1m in sales in the first half, Ormrod says the retailer has an opportunity to target a new customer base and to showcase its authority in footwear via range expansion including a branded offer, helping to enhance consumer perception of the brand – with store environments also much more appealing.

"Shoe Zone's more thoughtful approach to Big Box expansion, with about ten new stores each year, is necessary given the current trading environment, though given the retailer heralds the availability of attractive out of town space, we expect it to take full advantage. Though online accounts for just 6.7% of group revenue, the long-term validity of a UK and ROI store estate of 493 remains unconvincing, especially as oversized store estates have contributed to the downfall of many retailers this year."