Shoe Zone swings to full-year loss as Covid store closures bite

For the 52 weeks to October 3, 2020, Shoe Zone reported a loss after tax of £14.6m and a 24.3% fall in sales to £122.6m.

The retailer’s product gross margin finished lower at 61.4%, while its net cash position was just £6.3m at the end of the trading period. 

Chief executive Anthony Smith blamed the wretched results on the ongoing effect of the coronavirus pandemic, which has forced the retailer to close its stores. 

“In my second year back as chief executive, it is disappointing I am reporting on a year impacted by Covid-19. Despite this, there are positives such as the continued growth of digital and the commitment and focus of our loyal employees,” he said. 

“The financial pressure caused by Covid-19 has meant we now have debt on the balance sheet for the first time in over 15 years.”

Shoe Zone said that up to the end of December 2020 it had opened 51 new big-box stores and closed 50 older stores. The retailer said big-box stores accounted for 14.3% of all turnover during the period. 

The retailer also reported that digital sales grew 82% to £19.3m, while it had slashed average lease lengths to two years and driven rents down 30.9%, saving the business £770,000. 

Smith said the rollout of the retailer’s big-box stores had been suspended due to the financial pressures caused by the pandemic. 

He also said the ongoing lockdown in England meant the business would likely be left with “a winter stock overhang” of £7m it would be unable to address until autumn 2021.

“We do not expect profits will return to pre Covid-19 levels for the foreseeable future,” said Smith.

“Lockdown in November and January to mid-April so far in this financial year makes a return to profit extremely unlikely until the financial period ending on October 2, 2022, at the earliest.”

In a separate announcement, the retailer said it had appointed new finance director Terry Boot who replaces Peter Foot.