UK value footwear retailer Shoe Zone has said it expects to see a drop in revenue for the full year as the planned closures of its loss-making stores takes its toll as a result of the group’s ongoing store rationalisation programme.
In a full year trading update today (24 October), Shoe Zone said it expects to report revenues for the 52 weeks to the end of September of about GBP158m (US$208.3m), a drop of 1.1% on sales of $159.8m last year.
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The UK’s largest value footwear retailer said its preliminary results reflect the continued planned closure of loss making stores but added the group has “traded well” in the second half of the year.
The business continued to develop during the year at pace with the continued roll out of its ‘Big Box’ store strategy, in which it plans to open ten such stores by the end of 2017, and expansion into new online channels. Despite the impact of foreign exchange headwinds that continued through the second half, the board expects to deliver full year profit before tax broadly in line with expectations.
“The group has performed well through the year and I am particularly pleased with the six Big Box stores that we have opened,” said CEO Nick Davis. “These have performed in line with initial expectations and the feedback from customers has been extremely positive.”
Shoe Zone ended the year with 496 stores, having opened 21 and closed 35 during the period. Within the 21 store openings, six were the continued roll out of the Big Box format with latest format Shoe Zone stores being the remainder.
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By GlobalDataKate Ormrod, lead analyst at GlobalData, notes while Shoe Zone’s full year performance looks typical on the face of it with revenue expected to be in decline yet again, a closer look shows that revenues in the second half were down just GBP0.1m to GBP85.1m, indicating that the company’s first half of FY2017/18 could potentially mark the first instance of revenue growth since it went public in 2014.
“On the proviso of solid trading in the run up to Christmas, Shoe Zone has an opportunity to protect its 2% share of the UK footwear market in 2017 – an achievement as its share has been in decline for the past four years.,” she explains.
Meanwhile, Ormrod adds that Shoe Zone’s ‘Big Box’ strategy has evolved since it went public – taking advantage of the gap left by Brantano – but cautions is still has work to do to bring its proposition up to scratch, especially in terms of fashionability and competitive pricing compared to the likes of Primark.
She adds: “Plans to operate at least 50 Big Box stores feel ambitious given the state of the UK footwear market, and would need to be mitigated by further high street store closures.”
