Shoe Zone PLC (LON:SHOE) have seen their revenues grow in what appeared to be a tough year for British retail.
Across the yearly period, the firm reported that revenue increased 0.9% to September 29, 2018, to £162 million.
Shoe Zone have told shareholders that they intend to pay a final dividend of 8 pence per share for the year, giving a total of 11.5p.
This dividend was flat from one year ago, and it shows a year of stability in what was a cut throat period for British retail.
Pretax profit slumped 41% to £6.7 million due to rising costs, as underlying profits fell 15%.
The firm does seem have to made progress from when it warned shareholders on its profit expectations in August.
Digital growth remains “key”, Shoe Zone said. Revenue from this sector rose 13% in the second half year-on-year, compared to 5.2% growth in the first half. Digital revenue was £10.6 million, up 9.3% year-on-year.
Shoe Zone reflect on tough year
“Despite it being a difficult year for Shoe Zone, the business has achieved revenue growth, and delivered underlying pretax profit marginally ahead of our revised expectations following our revaluation of freehold property,” said Chief Executive Anthony Smith.
Shoe Zone said it has made a “solid” start to its new financial year, and is currently meeting expectations. The overall outlook is “positive”, it added.
“Notwithstanding the broader sector challenges, I am delighted to be back running this market-leading business, knowing its potential to produce great results,” Smith commented.
“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 this enhanced strategic focus will improve customer experience, increase market share and drive shareholder returns.”
In May, the firm saw its half year revenues fall which alerted shareholders.
Shoe Zone reached revenues of £73 million, down from £73.7 million posted during the same period in 2018.
Nevertheless, product gross margins increased to 62.0%, compared to 60.6% a year ago. Meanwhile, the company reported a profit before tax of £1 million, unchanged from a year ago.
“The first half of our financial year has been positive for the Group, trading in line with management’s expectations and achieving profitable revenue growth in our two key growth areas of Digital and Big Box.
Our ongoing strategic focus continues to be on the Big Box roll out with a target of 45 stores by the end of December 2019. This is progressing to plan and we will be operating from 33 Big Box stores by the end of May.”
Competitors still performing relatively well
Rival footwear retailer JD Sports (LON:JD) posted a 10% rise in UK like-for-like sales in September.
For the 26 weeks to 3 August, JD Sports revealed a like-for-like sales growth of over 10%, going against the well-reported high street gloom.
Group revenue for the leading trainer and sports fashion retailer jumped by 47% to £2.72 billion, compared to the £1.85 billion figure recorded the year prior.
JD managed to also expand their market presence as the firm purchased purchased its smaller UK rival Footasylum (LON:FOOT) in a £90 million deal.
Additionally, footwear titan Sports Direct (LON:SPD) have given shareholders many impressive updates across 2019.
A noteworthy update came in December, where the firm saw its shares surge.
The sports titan said pretax profit in the 26 weeks to October 27 grew 21% to £90.2 million from £74.4 million reported a year earlier, as revenue rose by 14% to £2.04 billion from £1.79 billion
Sports Direct said that revenue growth was boosted by mergers and acquisitions, growth in Premium Lifestyle and Wholesale & Licensing divisions and the full period of revenue contribution from House of Fraser versus 11 weeks last year.
At a time where British retail has never made trading more tough, the revenue growth of Shoe Zone should appease shareholders. 2020 may bring more turbulence for the firm.
However an optimistic tone can be carried through for shareholders as Shoe Zone has reassured shareholders about their ability to sustain trading.
Shares of Shoe Zone trade at 157p (-3.09%). 8/1/20 11:25BST.
