UK footwear retailer Shoe Zone has reported a revenue decrease of 2.7% to £161.32m ($197.51m) for the fiscal year 2024 (FY24), compared with £165.65m in the previous year.
The company's physical store sales took a hit, decreasing 6.5% to £126.1m from £134.8m in FY23. The drop is largely due to the closure of 26 stores within its retail network.
On a more positive note, digital revenues showed resilience with a 13.9% increase to £35.2m, million, up from £30.9m a year earlier.
The retailer’s profit before tax also saw a decline, coming in at £10.11m compared to the £16.18m recorded in FY23.
Shoe Zone attributed the downturn to several external and operational factors including inclement weather impacting key seasonal sales, escalating container costs, surging energy prices, increased depreciation due to higher capital investments and rising wages in line with UK National Living Wage increases.
In response to these headwinds, Shoe Zone has implemented cost-saving measures through renegotiation of rental agreements leading to reduced occupancy costs. It expects additional savings upon future lease renewals.
The company secured annual rent reductions totalling £0.4m across 35 store renewals, reflecting an average decrease of 21%.
Its product margins experienced a slight improvement to 62.8%, up from 62.3%.
The statutory gross profit decreased by £5.7m to £35.52m with the gross profit margin shrinking to 21.8%, down from 24.7%.
This was due to a combination of reduced sales, higher depreciation charges and increased expenses related to digital sales, partially offset by lower store occupancy costs and reduced stock purchases.
The retailer’s administrative expenses were marginally lower at £18.6m due to decreased company profit share payouts and foreign exchange losses, offset by higher wages, repair costs and digital-related expenses.
Distribution costs rose slightly by £0.4m to £5.7m due to increased distribution centre wages linked to the National Living Wage increase.
Shoe Zone saw its earnings per share for the fiscal year at 16.04p, down from 27.79p in the previous year.
The retailer is focused on completing its store refurbishment and relocation plan by the end of 2026, aiming to reduce capital expenditure while enhancing its online presence following strong digital sales performance.
An investment of £6.5m is planned for the following financial year for store refurbishments and infrastructure improvements including IT upgrades and new vehicle procurement.
Shoe Zone ended 2024 with 185 new format stores and 112 Original stores.
It plans to open or relocate an additional 17 while phasing out older locations and committing to a minimum of nine store refits to meet new format standards.
The company aims to expand its larger format stores in key towns through conversions or relocations with a target of 280 total stores by the end of FY26/27 while ensuring all Original stores are either refitted, relocated or closed.
"Shoe Zone reports 2.7% FY24 revenue drop amid market challenges " was originally created and published by Retail Insight Network , a GlobalData owned brand.
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