- Pre-tax profits rise 1.1% to £10.3m
- Sales fall as loss-making stores are exited
- New financial year off to “solid” start
Shoe Zone has reported a rise in full-year earnings and made a “solid start” to the new financial year.
The retailer said pre-tax profits rose 1.1% to £10.3m in the year to October 1, 2016, when sales fell 4.2% to £159.8m as loss-making branches were shut and amid difficult trading conditions in the first half.
Shoe Zone said current trading is in line with expectations and directors are “positive” about prospects for the year.
Product gross margin improved to 62% from 61.5% over the year, during which the average transaction value was up 5%.
Sales of product other than footwear rose 26%.
Multichannel sales advanced 11% and mobile and tablets now account for 74.9% of all website visits.
As of October last year, Shoe Zone traded from 510 stores, compared to 535 a year earlier.
The retailer has been piloting a big-box store format – it has now has three – and said the trial has been encouraging so far.
The bigger stores, twice the size of Shoe Zone’s typical large branches and with a more “contemporary” feel, carry more branded product which drives higher transaction values.
Shoe Zone chief executive Nick Davis reported: “The three trial stores are all located out-of-town and therefore this concept creates a significant opportunity for Shoe Zone in this space, with all future openings being out-of-town or in larger high street units.
“This new growth opportunity is a key strategic development for the business, broadening the reach of the Shoe Zone brand and enabling us to improve our market share.”
There are plans for six more big box branches this year.
Davis acknowledged trading conditions are likely to be challenging this year but was confident Shoe Zone’s value proposition would resonate with shoppers.
He said: “We are exposed to fluctuations in the value of sterling but have put significant work into managing the risk through foreign currency hedging and re-sourcing.
“While we anticipate this pressure may be here for some time, we expect to broadly maintain our gross margin percentages.”