Shoe Zone predicts substantial pre-tax loss despite online boost

Shoe Zone has reported a 100% growth in online sales since June, although this has not prevented a substantial fall in revenue due to the impact of the Covid-19 pandemic.

In a trading update for the 52 weeks to 5 October 2020, the footwear retailer revealed that in-store sales since reopening in June declined 20% year-on-year. This performance, alongside the closure of its entire store estate during the UK’s nationwide lockdown from 23 March to 15 June, means it expects to report a pre-tax loss for the year in the range of £10-12 million.

And Shoe Zone is anticipating a continued period of difficulty following the introduction of new nationwide lockdowns in Wales and Ireland, in which non-essential shops are being forced to shut.

The company added it now has a total of 460 stores across its estate, having closed 40 in the period, and warned of potential closure of 45 more in the 12 months following the planned reintroduction of the “antiquated” business rates system in April 2021.

Shoe Zone will also not be paying dividends in this financial year as it is prioritising debt repayments.

Anthony Smith, chief executive of Shoe Zone commented: "Shoe Zone has ended an incredibly challenging year with a robust plan and sufficient funding in place to ensure the future survival of the business. The exceptional growth in digital sales since the start of the Covid-19 pandemic demonstrates the flexibility of our operating model, and follows the decision to create an autonomous Digital department in 2019. However, it is very difficult at this stage to provide meaningful guidance on the future outlook, given the material uncertainty in the wider economy.”

In June, Shoe Zone reported a 31.9% increase in online sales in the six months to 4 April as it pursued a strategy of being more digitally focused even prior to the pandemic.