Shoe Zone is facing financial pressure due to rising shipping costs and sluggish sales performance.
- The footwear retailer has revised its profit forecast for the year, citing increased container prices.
- High shipping costs are attributed to reduced vessels and changes in shipping routes, including avoidance of the Suez Canal.
- Consumer demand has weakened, impacted by unusual weather during the spring/summer sales period.
- Recent cyber incidents have further strained Shoe Zone’s operational stability.
Shoe Zone, a notable footwear retailer, has announced expectations of reduced profits due to ongoing cost pressures primarily linked to shipping expenses. With increased container costs, the company foresees a drop in adjusted profit before tax for the fiscal year ending October 2, 2024, now projected at approximately £10 million. This figure had already been adjusted downwards to £13.8 million in May due to shipping disruptions and the impact of a raised National Living Wage.
The current profit projection is a result of several factors, including a decrease in available shipping vessels and the necessity to reroute shipments away from the commonly used Suez Canal. These logistical changes have caused a notable increase in container prices over the past six months, exacerbating the cost challenges faced by Shoe Zone.
In addition to logistical concerns, Shoe Zone’s sales have been adversely impacted by subdued consumer demand. Retail performance in the spring/summer period between April and June was hampered by unseasonal weather, resulting in a decline in store sales by 2.8% year-on-year, down to £59.4 million from £61.1 million in the prior year.
Despite a slight 1.5% increase in group revenue, which reached £76.5 million, the overall financial standing of Shoe Zone has been strained. Store sales have not matched expectations, partly influenced by external factors like weather anomalies, which have deterred customary shopping behavior.
Adding to the list of challenges, Shoe Zone recently experienced a cyber attack, further intensifying the operational difficulties and creating potential disruptions in daily activities.
Shoe Zone’s current financial difficulties reflect a complex interplay of external cost pressures and weakened consumer demand.
