On the back foot: Shoe Zone's shares hit as profits plunge

 
Helen Cahill
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Discount food stores have been performing better than their non-food peers (Source: Shoe Zone)

Shoe Zone's share price was on the back foot today after the budget retailer announced a hit to its profits.

The figures

Revenue at Shoe Zone for the six months to 1 April fell to £72.9m from £74.6m, a drop of 2.3 per cent.

Underlying profit before tax fell 24 per cent, down from £1.3m as compared to £1.7m for the same period the year before.

Read more: Retail sales slide as consumers cut discretionary spending

Shoe Zone did increase its interim dividend, however, up from 3.3p per share to 3.4p per share.

At time of writing, Shoe Zone's share price was down four per cent at 180p.

Why it's interesting

Rising inflation has been helping discounters such as Aldi and Lidl, but it appears the squeeze on consumer spending hasn't been helping Shoe Zone.

Read more: AO World's shares slide as retailer posts £12m operating loss

In fact, fashion as a sector has been in decline over the past year, and it has been hit particularly hard as overall retail sales have been falling. Figures from the British Retail Consortium this week showed that in May sales in non-food items fell 0.3 per cent in the three months to May.

And, statistics from BDO showed that fashion sales on the high street fell by 3.9 per cent in May.

What Shoe Zone said

Nick Davis, chief executive of Shoe Zone, said: "I am pleased with the group's performance in the first half as we continued to actively manage the retail estate while driving profitable sales.

"The devaluation of sterling against the dollar has impacted the group's statutory profits in the period, however, as we reach the annualised rebasing of this rate, we anticipate the ongoing impact will be significantly reduced."

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