Shares in discount footwear Shoe Zone soared more than 10 per cent this morning on the news that the group had secured its highest profit since it floated in 2014.
Profit before tax increased 18.4 per cent to £11.3m for the year to the end of September, up from £9.5m in 2017, and revenue increased 1.8 per cent from £157.8m to £160.6m last year.
Cashflow grew by 7.2 per cent to £15m while the firm's balance sheet remains debt free.
Earnings per share were up 20.7 per cent to 19p and the company will pay out a special dividend of 8p.
Why it's interesting
During the period, Shoe Zone developed and launched new store equipment in-house, saving around £50,000 per refit and opened 19 out-of-town Big Box concept stores with a further 20 targeted this year.
Digital revenue increased 19.9 per cent to £9.8m, contributing profits of £2.6m.
The retailer's success comes amid a picture of decline on the UK's high streets, with 125 chains shutting shop in 2018.
However, Shoe Zone has managed to buck that trend, with chief executive Nick Davis crediting both the core business model and a focus on expanding the firm's digital customer base.
What Shoe Zone said
Shoe Zone chief executive Nick Davis said: “I am pleased to report that 2018 has been another successful year for Shoe Zone with the group delivering a record profit before tax since IPO driven from a strong performance throughout the business while operating in a challenging consumer environment.
“This positive performance is a testament to the strength of the core business model and the effective focus on growing the big box and digital channels.
“As a result of the strong performance, the board is pleased to again return excess cash to shareholders by way of special dividend.
“We continue to make good progress against our strategic objectives and the board remains positive about the outlook for the group. We are incredibly proud of all of our team’s effort in delivering this progress and would like to thank them for all their hard work.”
What analysts said
Paul Hickman, analyst at Edison Investment Research, said: “Nobody told Shoe Zone that there’s a retail crisis…Tight property management is part of Shoe Zone’s culture and its 492 stores have average lease length of only 2.1 years. Shoe Zone is a winner from the property environment, with a 23 per cent reduction in rent at renewal delivering £431,000 of savings.
"Current trading is ahead of previous expectations, which in addition to the earnings beat, signals upgrades."