- Prachi Singh
In a trading update for the 52-week period, Shoe Zone Plc said trading conditions in the second half of the financial year were challenging. The company said in a statement that store trading since reopening in June has been broadly 20 percent down year on year with digital trading broadly 100 percent up year on year. Shoe Zone generated revenues for the period of approximately 122.6 million pounds compared to 161.9 million pounds in 2019. As a result of the closure of its retail estate from March 23, 2020 to June 15, 2020 owing to the Covid-19 pandemic, Shoe Zone expects to report a loss before tax in the range of 10 million pounds to 12 million pounds.
Commenting on the trading update, Anthony Smith, Shoe Zone’s Chief Executive, said: “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.”
Shoe Zone to close 45 stores by April 2021
The company added that no dividend will be paid in relation to FY20 as debt repayment is now being prioritised by the board. In addition, while pension funding has been agreed with the pension trustees up until the next triennial valuation in March 2022, it is expected that additional funds will be needed for one of the legacy pension schemes. The board does not anticipate Shoe Zone will be in a position to restart a dividend policy until at least the 2024/25 financial year.
Shoe Zone ended the year with 460 stores, having opened 10 Big Box stores and closed 40 stores during the period. At the year-end 50 Big Box stores were trading. Shoe Zone said, since the government has announced the reintroduction of the antiquated business rates system in April 2021 and delayed the revaluation, the company will have to close 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 percent of its estate in the next 18 to 24 months.