Shoe Zone shares climb as spring demand exceeds anticipations

Shares in Shoe Zone rose Friday after the shoe retailer revealed that trading since mid-May had beaten expectations.

The Leicester-based company noted “particularly strong” demand in May and early June, supported by healthy orders for summer goods, while declining container shipping rates boosted profitability.

It now expects to earn at least £10.5 million in adjusted pre-tax profit for the 12 months ended October 2, although this would be less than the £11.2 million last year.

Shoe Zone Stocks then increased by 10.7 percent to 229.4 pence, meaning their value has increased by about 138 percent over the past three years.

When the Covid-19 crisis erupted, the company experienced a major downturn in trade after lockdown restrictions forced high street stores to temporarily close.

Sales have yet to recover to pre-pandemic levels, but the group saw a significant increase in sales over the past fiscal year thanks to a strong rebound in store attendance and tremendous demand during the back-to-school period.

Over the next six months, Shoe Zone sales grew 7.9 per cent to £75.4 million, despite increased inflationary pressures in the British Isles.

Both brick-and-mortar and online revenues grew healthily, although this didn’t prevent the shoe chain’s pre-tax profit from more than halving to £1.5m.

Earnings were negatively impacted by weaker underlying product margins, higher currency losses, salary increases in line with the increase in the national living wage and the payment of a cost of living bonus to all employees.

Operationally, the AIM-listed company closed an additional 41 stores and opened 17, leaving it with 336 stores at the beginning of April.

Shoe Zone chief executive Anthony Smith said the company delivered “a robust and positive performance over the period, against a backdrop of consumer uncertainty and macroeconomic volatility.”

It later completed two further share buyback programmes, one worth £3 million and the other totaling £2.25 million.

Co-founded in 1917 by one of Smith’s great-grandfathers, the discount retailer claims to sell about 13 million pairs of shoes each year and employ more than 2,800 people.

The company was formerly known as Benson Shoe, which was taken over by Smith’s father Michael and uncle Christopher in 1980 when its annual turnover was around £1 million.

It grew over the next three decades through a series of acquisitions, including Shoefayre, Oliver Timpson and Stead & Simpson, catering to more price-conscious customers.

Shoe Zone was listed on the London Stock Exchange nine years ago at a value of £80 million, which has since grown to just over £97 million.