Shoe Zone shares down as group admits to “challenging” year

Shoe Zone

Shoe Zone shares (LON: SHOE) plunged on Wednesday after the group a “challenging” second half of the year.

Store trading since reopening in June has been -20% year on year whilst digital trading has broadly increased by 100% year on year.

The retailer said it had been impacted by lockdown and continues to be hit worst now in tier two and three locations across England.

Revenue for the 52-week period to 5 October 2020 was down from £161.9m to £122.6m.

Shoe Zone expects to report a loss before tax in the range of £10m to £12m.

Anthony Smith, Chief Executive, commented: “Shoe Zone has ended an incredibly challenging year with a robust plan and sufficient funding in place to ensure the future survival of the business. The exceptional growth in digital sales since the start of the COVID-19 pandemic demonstrates the flexibility of our operating model, and follows the decision to create an autonomous Digital department in 2019. However, it is very difficult at this stage to provide meaningful guidance on the future outlook, given the material uncertainty in the wider economy.

“The suspension of rates in April 2020 was a significant benefit for our business in FY20 and was in line with the government’s desire to save the high street. However, the government has announced the reintroduction of the antiquated business rates system in April 2021 and to make matters worse has delayed the revaluation. The consequence to Shoe Zone will be the closure of up to 45 stores prior to April 2021 and the potential closure of a further 45 stores in the 12 months following the reintroduction. In total this would represent the closure of up to 20% of our store estate in the next 18 to 24 months.”

Shoe Zone shares (LON: SHOE) are trading -20% at 36,22 (1048GMT). This year, shares have fallen from highs of 192.50p in January.