Schuh swings to loss after second ‘extremely challenging’ year

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Schuh fell to a loss for the financial year, with the retailer blaming a “second consecutive year of extremely challenging conditions” in the sector.

The footwear specialist posted a loss in pre-tax profits of £6.1m, down from a profit of £13.1m the previous year, due to a “number of factors which we will explore further, including exceptional impairment and onerous lease costs”.

Turnover also fell by over £20m for the year to £288.4m, from £308.5m in the 2018 financial year.

Schuh also flagged that it had succeeded in handing back two of its three German trading stores, which it announced it would be closing in May.

The footwear retailer said that in September 2019 it had engaged retail property consultant Capa with the “aim of reducing occupancy costs across the store estate” and that its US-listed parent company Genesco has “also engaged directly with landlords to seek their support in right-sizing rents”.

For the next financial year, Schuh said it would focus on “delivering initiatives to further enhance profitability and customer experience” including new store designs, and flagged the recent appointment of former New Look fashion buyer Nicola Monachello as its new buying director.

Finance and HR director David Gillan-Reid said: “We have been faced with an unprecedented number of trading headwinds, including: increasing occupancy (rent, rates and service charges) and staff costs (minimum/living wage, apprenticeship levy, pension auto-enrolment costs, etc), Brexit uncertainty/political instability, and consumer spending being lower on footwear and apparel.

“In addition, product and brand availability with margin pressure given the high dominance of sport brands, an extremely promotional environment and a significant footfall decline on the high street, in shopping centres and retail parks all make for a tough trading period.

“Added to this is the increased cost of doing business online without a corresponding reduction in what are generally fixed store costs, the necessary investment in marketing to keep existing customers and attract new, and the additional cost of a CRM system to comply with GDPR legislation.”