In a challenging market, Shoe Zone has maintained steady profits while managing to increase revenue slightly.
- Revenue for the group rose to £76.5m, a 1.5% increase from the previous year.
- Digital sales showed significant growth, rising by 19.6% to £17.1m.
- Physical store sales experienced a decline of 2.8%.
- The company’s profit outlook has been adjusted due to rising operational costs.
In a market rife with challenges, Shoe Zone has managed to maintain its profit levels while slightly increasing its revenue by 1.5% to £76.5 million. This is despite facing increased costs associated with the National Living Wage, shipping delays, and strategic shifts in its store operations.
While digital sales have grown by an impressive 19.6% year on year to reach £17.1 million, sales through physical stores have fallen by 2.8% to £59.4 million. This shift highlights the evolving consumer preferences towards online shopping and the company’s successful efforts to enhance its digital presence and customer experience.
The product margin for Shoe Zone improved to 62.7%, up from 60.1% the previous year. This improvement is attributed to the favourable conditions of lower container prices and a stronger sterling against the dollar.
The business maintained its focus on restructuring its store estate, having traded from 309 stores during the period, which is 27 fewer than the previous year. This included 29 closures, 15 new openings, and 15 refits. The company plans to continue relocating and refurbishing stores in the second half of the year, with new store openings anticipated before Christmas.
Investment remains a priority, with Shoe Zone expecting to allocate over £10 million annually for the next two years towards store refits and relocations, head office infrastructure, and further digital advancements. Part of their digital success stems from an efficient returns process facilitated by their network of physical stores, contributing to a reduced returns rate of 11.4%.
However, Shoe Zone has revised its full-year profit forecast from £15.2 million to £13.8 million. The forecast adjustment accounts for an unexpected rise in the National Living Wage to £11.44 in April, adding an extra £0.4 million in costs. Ongoing disruptions in the Middle East have increased shipping costs by £0.5 million, and the company has also made provisions for store closure-related costs, amounting to £0.5 million.
Shoe Zone has described its performance as robust against a backdrop of consumer uncertainty and economic volatility, underscoring the resilience and strategic success of its operations.
Despite economic pressures, Shoe Zone demonstrates resilience through strategic adaptation and investment in digital growth.
