Footwear retailer Shoe Zone this morning said it has suspended its dividend until it is able to pay off its £12m in debt, which it does not expect to be until 2025 at the earliest.
The firm – which had been debt free for 15 years – said borrowing had rocketed during the coronavirus pandemic.
Its defined pension schemes also have a deficit of £10.6m, which it is hoping to fix before it resumes shareholder pay outs.
“Until the business is debt free, has tackled the pension deficit, repaired the balance sheet and restored capital expenditure, the business will not be in a position to make dividend payments,” Shoezone said in a statement today.
“We anticipate this will not be before 2025.”
Shoe Zone’s share price fell 3.74 per cent following the announcement.
In 2019, the company paid a final dividend of 8p per share and a total ordinary dividend of 11.5p per share.
Shoezone reported that revenue fell 24.3 per cent to £122.6m in the year ended 3 October 2020.
Its loss before tax widened from £6.7m in 2019 to £14.6m last year.
Profits are not expected to return to pre-Covid levels “for the foreseeable future”, the retailer said.
It said lockdowns in November and this year “makes a return to profit extremely unlikely until the financial period ending on 2 October 2022 at the earliest”.