Shoe Zone’s financial performance for the period ending 30 March 2024 showcased a complex interplay of growth and challenges.
- While the group revenue increased by 1.5% year on year, profitability remained stable due to escalating operational costs.
- Digital sales emerged as a bright spot, witnessing a significant upswing of 19.6% compared to the previous year.
- Physical store sales saw a decline, compounded by strategic restructuring of the store estate.
- Amidst consumer uncertainty, Shoe Zone has reshaped its outlook for the full year, adjusting its profit forecast.
Shoe Zone has reported a modest increase in group revenue, reaching £76.5 million compared to the previous year’s £75.4 million. This 1.5% rise, however, did not translate into increased profitability, as adjusted profit before tax remained unchanged at £2.5 million. The stability in profit margins can be attributed to various factors including the rise in National Living Wage, shipping delays, and costly strategic store initiatives.
The digital sector stands out with an impressive 19.6% growth in sales, totalling £17.1 million. This surge reflects Shoe Zone’s focus on enhancing its online shopping experience and investments. However, physical store sales recorded a 2.8% decrease, dropping to £59.4 million from the previous year’s £61.1 million. Notably, Shoe Zone operated from 309 stores during this period, marking a net reduction after closing 29 stores and opening 15 new ones, alongside 15 refits.
Product margin improved to 62.7% from 60.1% during the same 26-week period last year, aided by lower container prices and a robust sterling against the dollar. This improvement indicates efficient cost management in certain areas. Despite these operational efficiencies, the company’s outlook for the fiscal year has been revised downward, now projecting a profit before tax of £13.8 million, adjusted from the initial £15.2 million estimate.
Several factors contributed to this revised forecast, primarily the unexpected increase in National Living Wage to £11.44, which added £0.4 million in costs for the latter half of the year. Additionally, disruptions in the Middle East impacting shipping times and costs, as well as provisions for dilapidations related to store closures, further pressured financials.
Shoe Zone’s strategy encompasses a future-focused approach with plans to invest £10 million annually in capital projects over the next two years. These investments target the enhancement of its store footprint, the digital platform, and head office operations, positioning the company for continued resilience amidst macroeconomic challenges.
Shoe Zone’s recent financial period underscores a resilient business strategy in a volatile economic landscape.
