Shoe Zone returns to pre-tax profits but revenues continue to fall

Shoe Zone, the UK's largest value footwear retailer, has announced its full results for financial year 2021, with the company returning to pre-tax profits of £9.5m following a £14.6m loss in 2020.

The Leicester-headquartered company reported a slight dip in revenues from 2020's £122.6m, reaching £119.1m across in-store and online. Store revenue dropped to £88.6m (£103.3m in 2020), whilst digital revenue made up the remaining £30.5m, growing 58% from £19.3m in 2020.

Physical retail trading had been impacted by Government mandated lockdowns, with stores trading for for only 36 weeks of the financial year, compared to 41 weeks in 2020.

Digital continues to be a key growth area for the business, trading strongly throughout the year due to closed retail locations, online exclusive ranges and Amazon partnerships. Digital gross margins increased to 57.8% due to a greater proportion of full priced sales and less markdowns.

At the end of the 52 week period, Shoe Zone was operating 410 stores, comprising of 343 main stores, 51 'big box' stores and 16 hybrid locations. The group closed 50 unprofitable locations.

The company ended the financial period with a cash and equivalent balance of £19.0m (rising from £13.3m in 2020) and a net cash balance of £14.6m.

Shoe Zone's CEO Anthony Smith said in a statement: "Shoe Zone had a very successful year due to the incredible hard work of our teams, by reducing costs, reducing non-essential capital expenditure, continuing to accelerate investment in our digital business alongside improving and streamlining operations.

"Our decision to invest in infrastructure and people pre-pandemic enabled us to take advantage of the change in buying habits and to cope with the increase in volumes through our digital shoehub platform.

"Big Box stores offer 650 styles per season (350 branded), Hybrid stores offer 475 styles per season (175 branded), and Original stores offer 300 core styles per season. As we refit existing stores to our new formats, the branded mix will continue to form a higher proportion of our overall sales.

"Our average lease length is now less than two years, giving us the opportunity and flexibility to respond to changes in any retail location at short notice. Property supply continues to outstrip demand and we therefore expect to take advantage of this environment and significantly improve our property portfolio over the medium term."