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January 9, 2019

Shoe Zone recovery gains full-year momentum

The recovery of Shoe Zone is gaining momentum as the UK value footwear retailer reported its first full year of revenue growth and a record profit before tax since it went public in 2014.

By Beth Wright

The recovery of Shoe Zone is gaining momentum as the UK value footwear retailer reported its first full year of revenue growth and a record profit before tax since it went public in 2014.

In its full-year preliminary results released today (9 January), the company said in the 52 weeks to 29 September, statutory profit before tax increased 18.4% from GBP9.5m (US$12.1m) to GBP11.3m. The increase marks the highest annual performance since its flotation in 2014.

Revenue in the period totalled GBP160.6m, up 1.8% from GBP157.8m in 2017. The increase, Shoe Zone says, demonstrates strong trading in all areas of the business, supported by digital growth and new openings of Big Box stores. 

Meanwhile, digital revenue increased 19.9% year-on-year to GBP9.8m, representing 6.1% of revenue and delivering more than GBP2.6m profit contribution before head office apportioned costs, accounting for 23.1% of total profit.

Product gross margin also remained strong at 62.9%, compared to 63.2% last year, reflecting a continued focus in direct sourcing, successful negotiations with suppliers and management of write downs. The slight fall year-on-year reflects an increase in multi-buy promotions and the impact of lower branded margins.

The UK’s largest value footwear retailer ended the year operating from 492 stores having opened 16 and closed 20 during the period. Ten of the openings were the continued roll out of Big Box and the remaining six were the new Unity Town Centre format. 

“This positive performance is testament to the strength of the core business model and the effective focus on growing the Big Box and digital channels,” says CEO Nick Davis.

Sofie Willmott, senior retail analyst at GlobalData, notes that while weaker footfall plagued many retailers over the summer, “the second half of its financial year proved rewarding for the value footwear specialist, and growth in H2 was more than double that achieved in H1 (2.4% in H2 versus 1.1% in H1) – with its proposition clearly resonating with cash-strapped shoppers.”

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