Shoe Zone shares climb as spring demand exceeds anticipations

Shares in Shoe Zone soared on Friday after the footwear retailer revealed that trading since the middle of May had surpassed forecasts.

The Leicester-based firm noted ‘particularly strong’ demand in May and early June, supported by healthy orders for summer goods, while falling container shipping rates boosted its profitability.

It now anticipates earning at least £10.5million in adjusted pre-tax profits for the 12 months ending 2 October, although this was down on the £11.2million made the previous year.

Stepping up: Leicester-based footwear retailer Shoe Zone noted ‘particularly strong’ demand in May and early June, supported by healthy orders for summer goods

Shoe Zone shares subsequently jumped by 9.2 per cent to 229.4p just before markets closed on Friday, meaning their value has grown by around 138 per cent in the past three years.

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

Turnover has yet to recover to pre-pandemic levels, but the group saw revenues rise significantly in the last financial year thanks to a strong rebound in store footfall and bumper demand during the back-to-school period.

In the following six months, Shoe Zone’s sales grew by 7.9 per cent to £75.4million despite heightened inflationary pressures across the British Isles.

Both bricks-and-mortar and online revenues grew healthily, although this failed to prevent the footwear chain’s pre-tax profits from more than halving to £1.5million.

Earnings were negatively impacted by weaker underlying product margins, higher foreign exchange losses, raising salaries in line with the increase in the National Living Wage and paying all staff a cost-of-living bonus.

Operationally, the AIM-listed company closed another 41 establishments while opening 17, leaving it with 336 stores at the start of April.

Anthony Smith, chief executive of Shoe Zone, said the firm ‘delivered a robust and positive performance in the period, against a backdrop of consumer uncertainty and macroeconomic volatility.’

It later completed two more share buyback schemes, one worth £3million and the other totalling £2.25million.

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 employs over 2,800 people. 

The business was previously known as Benson Shoe, which was acquired in 1980 by the Smiths’ father Michael and uncle Christopher when its annual turnover was approximately £1million.

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

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