The company attributes this to a dip in consumer spending and atypical weather patterns that have adversely affected sales and earnings.
UK Chancellor Rachel Reeves has declared a hike in employer National Insurance contributions from 13.8% to 15%, effective from April of the following year. Additionally, the salary threshold for when this tax kicks in has been reduced from £9,100 to £5,000.
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Post the government’s budget announcement in October 2024, consumer spending has further declined.
UK retailers, including H&M and Amazon, warned the budget could raise costs by £7bn. A discussion paper was also released on 30 October which recognised the need to ease burdens on the retail and hospitality sectors.
This budget also means Shoe Zone will face higher expenses due to increased National Insurance contributions and a raised National Minimum Wage.
These heightened costs have led Shoe Zone to decide to shut down several outlets that are no longer financially sustainable. This situation is expected to considerably affect the company’s annual financial performance, with shares experiencing a 40% drop.
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By GlobalDataConsequently, Shoe Zone now anticipates its adjusted pre-tax profit for the fiscal year ending on 27 September 2025, to be at least £5.0m, a figure that falls short of the previously estimated £10.0m.
Given these developments, Shoe Zone has chosen not to propose a final dividend payment for the fiscal year that concluded on 28 September 2024.
The company plans to provide an additional update on its trading performance when it releases its full-year results for FY2024 on 21 January 2025.
Shoe Zone operates through a network of 297 stores across the UK and employs roughly 2,250 staff members.
Its retail portfolio is divided into 112 traditional high street stores and 185 larger outlets. The latter category includes stores offering a range of brands such as Skechers, Hush Puppies, Rieker, and Lilly & Skinner.
For the fiscal year ending 28 September 2024, Shoe Zone reported unaudited revenues of £161.3m compared to £165.7m in FY2023. The revenue decline of 2.7% was primarily due to less favourable weather during key summer months and operating out of fewer stores – specifically 26 less than before.
The product margin saw an improvement at approximately 62.8% (up from FY2023’s 62.1%), largely owing to reduced container costs during the first half of the year. An interim dividend payment of 2.5 pence per share totalling £1.2m was distributed in August 2024.
Earlier in July, Shoe Zone adjusted its profit forecast for FY24 downward due to rising shipping costs and weaker than expected sales during spring and summer seasons.
The retailer highlighted ongoing cost pressures related to container prices over the six months leading up to July.
