Shoe Zone warns of store closures and full year loss
Shoe Zone has said it expects to post a pre-tax loss of between £10 million and £12 million in the year to 5 October and warned that it may be forced to close up to 90 stores.
In a pre-close trading update, the footwear retailer said it experienced a “challenging” second half due to the impact of the Covid-19 pandemic on sales. Revenues in the year came in at £122.6 million compared to £161.9 million in the previous 12 months.
Shoe Zone said its in-store sales have been around 20% down since June when shops reopened after lockdown. In contrast, online sales have increased by around 100%, but this has not been enough to offset lower sales in-store.
The retailer added: “Further recent government lockdown guidance has not helped the situation particularly with the disappointing announcements in Wales and the Republic of Ireland. These lockdowns have added further uncertainty that had already been created by the new Tier system in England, where our stores in Tiers 2 and 3 have been greatly impacted.”
Shoe Zone ended the year with 460 stores after opening 10 Big Box stores and closing 40 shops in the period. The retailer is now putting all new openings are on hold until trading conditions improve, although a few stores will still relocate.
Anthony Smith, Shoe Zone chief executive, said: “Shoe Zone has ended an incredibly challenging year with a robust plan and sufficient funding in place to ensure the future survival of the business. The exceptional growth in digital sales since the start of the Covid-19 pandemic demonstrates the flexibility of our operating model, and follows the decision to create an autonomous Digital department in 2019. However, it is very difficult at this stage to provide meaningful guidance on the future outlook, given the material uncertainty in the wider economy.”
Shoe Zone has also used the update to criticise the government’s decison to reintroduce what the retailer described as an antiquated business rates system in April 2021 and to delay revaluation. It said the move will result in it closing 45 stores prior to April and potentially shuttering a further 45 in the 12 months following the rates reintroduction.
The retailer added: “Never has the rating system been more unfair. Our rates as a proportion of rent have increased from 26.4% in 2009 to 54.3% in 2019 and forecast to be close to 60% in 2021. This is unsustainable for most high street retailers and closures will continue unabated until the government makes substantial changes.”
