Shoe Zone (LON: SHOE) has reported a growth in profits and revenue, sending shares up 12.5%.
The retailer expects to report revenue of £161 million, compared to the £157.8 million revenue in 2017. Pre-tax profit is expected to come in at £11 million for the year to 29 September.
Despite a total of 20 stores closing over the year, Shoe Zone contributed growth to the ten new out-of-town retail park ‘big box’ stores.
“The group has performed well through the year with a particularly strong performance in the second half. Our 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,” said the group’s chief executive, Nick Davis.
“I am particularly pleased that the continued strong cash conversion has enabled the board to outline its intention to propose its third special dividend.”
“The new financial year has started well and there are a further 14 big box openings planned. We look forward to updating shareholders on progress at the time of our final results in January,” Davis added.
FinnCap analyst Peter Smedley said: “Today’s strong FY18 pre-close trading update represents a positive profit surprise. We, therefore, increase our FY18 PBT forecast by +9% to £11 million.”
“The rollout of Big Box and strong progress in online sales underpin the medium-term growth profile, backed by SHOE’s strong balance sheet.”
“SHOE’s operational and financial performance in FY18 is even more noteworthy given the raft of profit warnings reported elsewhere in the UK clothing/footwear sector over the past two months.”
“It is difficult for any retailer to stand apart from the turbulence affecting the sector at present, but the combination of SHOE’s strong performance, low valuation and appealing dividend yield (6.9% on the ordinary) make it look a particularly attractive investment, in our view,” he added.
Shares are currently trading up 11.25% at 183,00 (1740GMT).