Shoe Zone warns of profit drop amidst financial struggles

Shoe Zone, a UK-based footwear retailer, has announced a significant drop in annual pre-tax profits, projecting earnings to be 'not less than' £9.6 million for the year ending on September 28, 2024, which marks a decline of over 40% from the previous year’s £16.2 million. The company attributes this slump to several factors including unseasonal weather during the critical summer months, which negatively impacted sales performance. Full-year revenues have also taken a hit, dropping by 2.7% to £161.3 million. The challenging trading conditions have been exacerbated by the decision to reduce the store portfolio, with Shoe Zone closing 26 locations, leaving the chain with 297 stores. Additionally, operational costs have risen due to increased wage bills stemming from a national minimum wage rise, alongside higher shipping and energy expenses that affected overall profitability. Despite these setbacks, the company reported that its 'Back to School' sales period showed signs of recovery, exceeding expectations. Chairman Charles Smith remarked on the contrasting trading performance between the first and second halves of the year. He underscored the company’s ongoing efforts to refresh its retail strategy through relocating and refurbishing existing stores, as well as maintaining a focus on expanding the footprint of new format stores. Shares in Shoe Zone experienced a drop of up to 13% following the announcement of these results, highlighting the market's caution towards the retailer’s outlook amidst these profitability challenges.