Shoe Zone faces significant challenges due to elevated shipping costs and reduced consumer demand.
- The company revised its profit forecast for the fiscal year ending 2 October 2024 to approximately £10 million.
- Shipping delays and increased costs related to the National Living Wage have compounded financial pressures.
- Rising container prices and unseasonal weather have contributed to weakened sales during spring/summer 2024.
- A recent cyber attack adds to the difficulties Shoe Zone is currently navigating.
Footwear retailer Shoe Zone has revealed considerable financial struggles resulting from ongoing pressures linked to high shipping costs and tepid sales figures. In a statement released on 2 July 2024, the company adjusted its expected profit before tax for the fiscal year ending 2 October 2024 to be around £10 million. Previously, in May, forecasts had already been lowered to £13.8 million, affected by both shipping delays and increased expenses associated with the National Living Wage.
Shoe Zone cited a combination of diminished shipping vessel availability and the necessity of rerouting away from conventional pathways such as the Suez Canal as key factors in the significant rise in container costs observed in recent months. Such logistical challenges have invariably resulted in higher operational expenses, further tightening the company’s financial position.
Additionally, consumer demand has slumped during the spring/summer sales period from April to June, which management attributes to unseasonal weather conditions impacting foot traffic and purchasing behaviours. Consequently, this downturn in consumer activity has noticeably dampened Shoe Zone’s revenue expectations for the year.
For the first 26 weeks ending 30 March 2024, the company’s profit before tax stagnated at £2.5 million. During this period, group revenue rose marginally by 1.5% year on year, reaching £76.5 million compared to £75.4 million in the equivalent timeframe in 2023. However, in-store sales experienced a decline of 2.8% year on year, dropping to £59.4 million from £61.1 million, reflective of wider market challenges.
Compounding these economic issues, Shoe Zone faced a cyber attack last week, exacerbating an already challenging business environment and prompting further considerations on the resilience and security of its operational infrastructure.
Shoe Zone is grappling with a complex array of challenges as it navigates heightened costs and subdued market demand.
