Oct 15, 2018
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Shoe Zone enjoys summer boost, sales and profits to rise

Oct 15, 2018

With UK retailers that have large physical stores businesses currently issuing profit warnings at a rapid rate, it was encouraging to see one having good news on Monday. Value footwear retailer Shoe Zone issued an update ahead of its full-year results saying that trading in the 52 weeks to September 29 saw rising sales and will see higher profits.

Shoe Zone

Not that sales actually surged, but in the current environment, an increase of 1.8% to £161 million is definitely encouraging.

The company said that the improvement was due to “strong performance across the business, with both physical (‘big-box’ and traditional stores) and digital channels demonstrating growth allied with the completion of the loss-making store rationalisation programme.”

It now expects to report annual pre-tax profits ahead of market expectations with a figure somewhere above £11 million. “This improvement is driven by a stronger revenue and margin performance from the spring/summer ranges as well as benefiting from progress achieved through the further development of the group's foreign exchange hedging policy,” it said.

On the same day that Superdry issued a profit warning due to foreign exchange hedging issues and the very hot summer, it was clear that not every business in the UK got such a positive boost over the past few months.

But weather and currency issues are often beyond an individual company’s control and in many ways, selling seasons at the moment are something of a lottery.

The fact that Shoe Zone turned out to be a lottery winner this time boosted its share price on Monday pushing it over 12% higher in early trading.

Looking further at the details of its update, the company said that it “continues to demonstrate strong cash conversion and closed the year with an approximate net cash balance of £15.7 million,” which is almost £4 million higher than a year ago. That extra cash will be given back to shareholders in the form of a special dividend, another factor that helped the share price to rise.

CEO Nick Davis hailed the strong performance, particularly in the second-half, and said that the “strategy of growth through big-box expansion and online channels allied with excellence in the operations of the core Shoe Zone estate provides us with a clear path for the future.”

He also said that “the new financial year has started well and there are a further 14 big-box openings planned.”

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