In a challenging financial landscape, Shoe Zone experiences stable profits despite rising revenues.
- Shoe Zone’s revenue increases by 1.5% to £76.5 million compared to the previous year.
- A notable rise of 19.6% in digital sales contributes to the company’s growth.
- Despite a decrease in store sales by 2.8%, the overall product margin improves.
- The company’s full-year profit forecast is adjusted downward due to rising operational costs.
In the face of financial headwinds, Shoe Zone has managed to maintain its profits steady while achieving a revenue increase. The company’s revenue stood at £76.5 million, marking a 1.5% rise from the previous year’s figures of £75.4 million. This modest growth is bolstered by a significant surge in digital sales, which rose by 19.6% year on year to reach £17.1 million. These results highlight the company’s ongoing commitment to enhancing its online presence and improving customer experiences.
Conversely, store sales have declined by 2.8%, dropping from £61.1 million in 2023 to £59.4 million. Despite this downturn, Shoe Zone has reported an improved product margin of 62.7%, up from 60.1% in the previous year. This improvement is largely attributed to lower container prices and a stronger sterling to dollar exchange rate, which have positively impacted costs.
Shoe Zone continues to focus on optimizing its store estate, operating 309 stores during the reviewed period – 27 fewer than the previous year. The company has undertaken a strategic approach to close 29 stores, open 15 new ones, and refit an additional 15. Furthermore, the retailer plans to relocate and refit more stores in the coming months, with new openings anticipated before Christmas.
A substantial investment of over £10 million has been earmarked for capital projects over the next two years, reflecting Shoe Zone’s commitment to its store refit and relocation strategy, as well as improvements in head office infrastructure and digital capabilities. Notably, a key factor in the success of Shoe Zone’s digital operations is its efficient returns process, facilitated by its wide network of stores. The returns rate has declined to 11.4% from 11.9% in the first half of 2023, indicating improved operational efficiency.
However, Shoe Zone has revised its full-year profit forecast from an initial estimate of £15.2 million to £13.8 million. This adjustment accounts for the increased National Living Wage, unexpectedly rising from £11.08 to £11.44, which adds £0.4 million to the company’s costs for the second half of the financial year. Additionally, disruptions in the Middle East affecting shipping times and container prices add another £0.5 million in costs, alongside £0.5 million allocated for store dilapidations.
Shoe Zone demonstrates resilience in a volatile market, adapting strategies to maintain stability.
