Shoe Zone hails digital growth despite swinging to loss, sees no quick return to profits
No surprises that Shoe Zone joined the lengthy list of struggling firms when the UK’s largest value footwear retailer reported its financial results for the 52 weeks ended 3 October on Monday.
Revenues for the period fell 24.3% to £122.6 million and the pre-tax loss came in at £14.6 million compared to a pre-tax gain of £6.7 million a year ago. That’s its first recorded loss in 15 years and Shoe Zone admitted the prospect of returning to profit was “extremely unlikely until the financial period ending on 2 October 2022, at the earliest”.
Product gross margin also fell to 61.4% from 62.7% in 2019 while net cash in hand also dipped to £6.3m from £11.4 million 12 months ago.
However, there was at least one predictable positive. It saw continued growth of digital revenues in the period, jumping 82% to £19.3 million. And profit contribution from digital also increased 15.3% to £4.6m. Its email database also grew to 1.45 million engaged members, up from 1.1 million, as more consumers shifted to buying online during the pandemic.
And despite the permanent closure of 50 stores last year, its presence in town centres and retail parks still stands at 430 stores, with an additional nine Hybrid Town Centre stores opened in the period.
It noted the hybrid concept “performed well and will be our strategy for town centre renewal over the next five years, which we anticipate will contribute the majority of our town centre profitability”.
Its total store count also includes 51 big box units opened by the end of December. Another positive was that rents at renewal fell by 30.9%, saving £777,000.
On the product front the business, which says an average year sees 16 million pairs of shoes sold at an average retail price of £10, said it had revived the Lilley & Skinner brand in spring/summer with premium sandals and autumn/winter with boots. These are sourced direct from factories and deliver strong margins, it noted.
Meanwhile, Osaga, Red Level, Stone Creek and Urban Territory, former Brantano brands acquired during the year, have been developed for its big box and hybrid ranges. These brands will enhance its "made to order" product ranges, it added.
Last year, Clarks gave Shoe Zone notice it was ending its relationship “due to their ongoing difficulties”. However, “this brand was performing poorly for us, so will not be missed”, it pointedly added.
Separately, Shoe Zone has announced the appointment of Terry Boot as its new finance director. Boot has over 25 years' experience in the UK and European retail market having been UK finance director and management services director at Brantano UK and Jones Bootmaker from 2008 to 2016. He had previously been finance director of Brantano UK from 1998.
Since 2017, Boot has been CEO of UK jewellery buying group The Company of Master Jewellers.
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