Shoe Zone’s profits decline as loss making stores are shut

Value footwear retailer Shoe Zone revenue dropped 4.6 percent during the six months to April 2, 2016, down from 78.2 million pounds during the first half of FY15 to 74.6 million pounds, reflecting the closure of 23 loss making stores and temporary stores.

During the first half of FY16, the footwear retail group report a 4.5 percent decline in pre-tax profit year on year to 1.6 million pounds, as Shoe Zone invested in refurbishing its remaining store portfolio. and shutting loss making stores. Counting a total of 518 stores, Shoe Zone shifted 53 stores of its during the period to its “Grade 1” category and will continue to do so throughout the year.

“We have continued to make good progress with our store portfolio upgrade and rationalisation programme and I am pleased with the performance of the Group in what was another difficult period for the clothing and footwear industry,” commented Anthony Smith, Chief Executive of Shoe Zone.

Product gross margin improved, increasing to 61.1 percent, up from 60.5 percent in H1 FY15, while Shoe Zone maintained strong cash conversion with a 37.3 percent increase in net can to 8.1 million pounds in H1 FY16, up from 5.9 million pounds in H1 FY15. Rent on store renews decreased on average by 29.9 percent during the six months, representing a 222,000 pounds cost saving. Rent as a percentage of turnover is currently 14 percent, down from 14.7 percent in FY15.

Shoe Zone made a significant infrastructure investment at its Leicester distribution centre during the six mounts, which included a new, online fulfilment area that resulted n efficiency savings. Non-desktop and mobile devices accounted for 70 percent of the online visits to Shoezone.com in H1 FY16, up from 64 percent in the same period a year ago.

“We are excited to be launching our “Big Box” format in three locations in August,” added Smith. “This will allow ShoemZone to access the important out of town market, creating a new avenue for growth. The Group has traded in line with management’s expectations since the period end and the Board continues to look to the future with confidence.”

Photos: Shoe Zone, Facebook