Shoe Zone has reported a “positive” first-half performance, when it held sales and profits firm, as it benefited from falling rents on store lease renewals.
The retailer reported pre-tax profit of £1m in the six months to March 30 – the same as last year – when sales edged down 1% to £73m.
Shoe Zone said that rent on renewals had fallen on average by 18.5%, which would save it £334,000 over the year.
Big-box stores and digital, two of the footwear specialist’s key investment areas, achieved “profitable revenue growth” over the period.
Shoe Zone, which used to only trade from high street and shopping centre locations, is rolling out a big-box format. It was trading from 26 big-box stores at the end of the reported financial period and these stores generated £5.5m of its £73m turnover.
The footwear specialist will have 33 big-box stores open by the end of May and aims to have 45 by the end of 2019.
It has started trials for a new “hybrid” store format, which will have the look and feel of a big-box store but in high street or shopping centre locations, in more affluent areas.
Digital sales grew 4.9% to £5m over the period but profits surged 19.9% to £1.5m. The retailer said it had grown its email database through in-store sign-ups, which had enhanced the impact of its targeted email promotions.
Shoe Zone chief executive Nick Davis said: “The first half of our financial year has been positive for the group, trading in line with management’s expectations and achieving profitable revenue growth in our two key growth areas of digital and big box.
“Trading momentum has continued into the second half, in line with market expectations. With our growth strategy in place, we believe we are favourably insulated against many of the structural sector issues and the board continues to look to the future with confidence.”
Big Box will drive ‘sizeable revenue increase’
Speaking to Retail Week, Shoe Zone boss Davis said that the retailer would focus on expanding its portfolio of out-ot-town Big Box stores in the short to medium turn, which would in turn drive a “sizeable revenue increase”.
“In January, when we last updated the City, we had 25 [Big Box] stores. We’ve been very busy since then, and we’re going to open our 33rd store next week. We expect to have 45 such stores open by December, which is the end of our calendar year.
“Our medium-term plan is to have 100-plus Big Box stores, which would represent quite a seizeable increase in revenue for us.”
Davis also provided more detail on trials that Shoe Zone have been undertaking with a ‘hybrid’ store concept. He said that the retailer have opened two such concepts in Manchester Arndale and Exeter, with plans to open another six in the course of the rest of the year.
He said the hybrid concept stores ”take the best bits of Big Box and bring it to the high street”, and would offer a reduced brand mix with ”a more premium look and feel” than normal high street stores.