Shoe Zone, the budget footwear retailer, has released its unaudited full-year results, revealing a decrease in revenue but a return to profitability. Despite being faced with two major lockdowns, the company was able to trade for 36 out of the 52 weeks in the year ending October 2, compared to 42 weeks the previous year and the full 52 weeks in fiscal year 2019. As a result, sales dropped from £122.6 million in 2020 to £119.1 million this year and £162 million in 2019. Furthermore, the number of stores decreased from 460 in 2020 to 410.

However, Shoe Zone experienced growth in digital turnover, which helped offset some of the revenue decline. Digital revenue reached £30.6 million, marking a significant increase of 58.5% compared to 2020 and an impressive 188.7% compared to 2019 when the company was lagging behind in digital development. Digital revenue accounted for 25.7% of total revenue this year, up from 15.7% last year and just 6.5% two years ago.

Although the gross product margin slightly decreased from 61.4% in 2020 to 61.3% this year, Shoe Zone’s net cash balance more than doubled, reaching £14.2 million compared to £6.3 million the previous year. Additionally, the company expects its profit before tax to be “not less than £6.5 million,” a significant improvement from the £14.6 million loss in the previous year and close to the £6.7 million profit in 2019.

Shoe Zone attributed the impact of the pandemic on its first-half figures but highlighted positive trading in the second half, particularly after the end of lockdowns. The company emphasized the importance of digital investment, stating that it will be the core of its strategy moving forward. It plans to invest in its employees and the Shoehub platform, increase drop ship partners and marketplaces, introduce exclusive products and brands, and enhance customer experience through additional payment and delivery options.

Despite the company’s digital focus, Shoe Zone also stressed the significance of its physical store network, emphasizing its critical role in its efficient returns process. While the company aims to expand its Big Box and Hybrid store formats, it also intends to reduce the number of original Shoe Zone stores that are no longer commercially viable. Out of the 410 remaining locations, 343 are original Shoe Zone stores, 51 are Big Box stores, and 16 are Hybrid stores.

Anthony Smith, the CEO of Shoe Zone, described the results as “solid” in what he called an “intensely challenging” year. However, he acknowledged the uncertainty that lies ahead, including the ongoing impact of Covid-19, global supply chain challenges, and inflationary pressures. The company has experienced a significant increase in container prices over the past year, and it expects these issues to persist for at least another six months until the supply chain stabilizes.

Sources:
Retail Gazette
Shoe Zone