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Shoe Zone with declining profits blames financial burden of public policies

Jan 30, 2020 United Kingdom
Shoe Zone with declining profits blames financial burden of public policies
In the last financial year Shoe Zone's underlying pre-tax earnings slid to 9.6 million British pounds from 11.3 British pounds in the previous year. Management blames Government for increasing taxes
In the last complete financial year, which terminated on the 5th of October 2019, Shoe Zone's revenue increased by 0.9% to 162 million British pounds while underlying pre-tax earnings slid to 9.6 million British pounds from 11.3 British pounds in the previous year.

Anthony Smith, Chief Executive of Shoe Zone plc, commented: "Despite it being a difficult year for Shoe Zone, the business has achieved revenue growth, and delivered underlying profit before tax marginally ahead of our revised expectations following our revaluation of freehold property (...) over the past 10 years the (business) rates paid as a proportion of our rent has increased from 26.4% in 2009 to 54.3% in 2019*. Despite rationalising our store estate, the value of rates paid has increased by 700 thousand British pounds (...) despite having 38% fewer stores and 30% lower sales.

The executive blames the UK Government for imposing increases in the operational cost structure and said Government needs to re-think the "increasing financial burden placed on businesses on the High Street" and adopt new policies.

Retail strategy


The company’s revenue performance for the period had been driven by an expansion of Shoe Zone’s ‘Big Box’ stores, located outside of town centres in areas such as retail parks. The company opened 21 new Big Box stores over the year, expanding the total number to 45. Alongside the continued momentum in Big Box expansion and Digital growth, Town Centre renewal is the third key focus for Shoe Zone's strategy. Following a successful trial of the Hybrid stores, in 2020 the company plans to convert further 20 of the traditional stores to this more premium Town Centre Hybrid model.


Outlook

Looking forward, Shoe Zone said it had made a “solid start” to its current year, adding that it is planning more Big Box store openings to take the total to 65 by December 2020. The company is also planning to convert 20 of its traditional stores to a “more premium” town centre hybrid model by October 2020: "The core business model remains robust and combined with the refreshed strategy of Big Box expansion, higher Digital growth and Town Centre renewal, the board is confident that this enhanced strategic focus will improve customer experience, increase market share and drive shareholder returns."

About Shoe Zone

Shoe Zone is one of the largest UK specialist value footwear retailer operating in the low-price segment and offering women's shoes, men's shoes, boy's shoes and girl's shoes. The company operates from a portfolio of over 500 stores and employs approximately 3 500 employees across the UK and the Republic of Ireland.

*Business rates are taxes that the UK government charges on businesses based on the physical space occupied

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