Shoe Zone anticipates a substantial impact on its annual profits due to escalating shipping costs and declining sales. The footwear retailer has adjusted its profit expectations for the financial year ending 2 October 2024, now projecting a figure of approximately £10 million. This comes after a previous downgrade to £13.8 million, influenced by increased shipping delays and costs linked to the National Living Wage hike.
- The revised profit outlook is attributed to reduced availability of shipping vessels and increased costs due to rerouting from the Suez Canal.
- Container prices have seen a significant increase over the past six months, adding pressure on Shoe Zone’s financial performance.
- During the spring/summer season, the retailer experienced weakened consumer demand, attributed to unexpected weather patterns.
- Earlier in the year, Shoe Zone’s profits remained flat for the half-year ending 30 March 2024, while overall group revenue saw a slight year-on-year increase.
Shoe Zone has warned of a significant impact on its annual profits due to rising shipping costs and declining sales. This footwear retailer now expects adjusted profit before tax for the fiscal year ending 2 October 2024 to be approximately £10 million. This forecast comes after an earlier reduction in May, when profit expectations were downgraded to £13.8 million as the company faced logistical challenges and the implications of the National Living Wage increase.
The amended profit prediction stems from a decrease in the availability of shipping vessels and the additional costs incurred by rerouting shipments away from the Suez Canal. Consequently, container prices have surged over the past six months, exacerbating the financial strain on Shoe Zone.
Moreover, the company has suffered from a decline in consumer demand during its spring/summer sales period, influenced by adverse weather conditions. As a result, the retailer’s sales performance did not meet expectations during the critical months of April to June.
Earlier this year, Shoe Zone reported flat profits for the half-year period ending 30 March 2024, with profit before tax remaining at £2.5 million. Despite a slight year-on-year increase in group revenue to £76.5 million, store sales saw a decline, falling by 2.8% from the previous year’s £61.1 million to £59.4 million.
In addition to these challenges, Shoe Zone recently experienced a cyber attack that added to its list of operational hurdles.
Shoe Zone’s financial outlook reflects the challenges posed by rising costs and reduced consumer demand.
