Shoe Zone loss-making in H1, sales fall, but has good news among the bad
Budget footwear retailer Shoe Zone’s six-month results on Tuesday contained some good news, although the headline story was about overall sales declines, even though the period only included a few weeks of lockdown.
The half-year to April 4 saw revenue falling to £68.9 million from £73 million a year earlier. But in the 12-month period to February, it had seen revenue growth of 2.6%, so pre-lockdown, sales were clearly heading in the right direction.
And digital sales increased by 31.9% to £6.5 million, achieving a higher profit contribution of £1.9 million.
Additionally, the company had more net cash to hand at the end of March (£3.6 million) than it had a year earlier after it took cash conservation actions in the wake of the coronavirus crisis.
But while that was all good news, it still made a statutory pre-tax loss of £2.5 million after a profit of £1 million in the prior-year period.
All of its stores closed on March 24 and 416 in England, Northern Ireland and the Republic of Ireland reopened on 15 June, with those in Wales and Scotland to open at the end of this month. The reopening programme doesn’t include some 20 stores that are closing permanently.
The extent to which the closures dented its results, despite its stores having only been shut for 11 days when the half-year ended, means that the second half is likely to take an even bigger hit as it contains over two months of lockdown.
Yet the firm’s strategy remains in place with the company focused on growing the number of its big box stores, expanding its digital operations and reviving its town centre stores.
It ended the half-year with 47 big box stores, up from 26 a year earlier and these generated £9.4 million of total turnover for the first six months, up from £5.5 million in the 2019 period. One store was converted from ‘high street’ to ‘hybrid’ format in the period.
As mentioned earlier, digital was a major success for the firm in the six months and its contribution has grown to 17.7% overall, although this has been skewed by the lockdown. Digital was understandably particularly important in the final weeks of the half-year as consumers stayed at home even before the lockdown began.
The company made the most of its webstore during lockdown with “a very aggressive Buy One Get One Free (BOGOF) promotion on all stock to generate cash as quickly as possible”. And although this has been now been amended to BOGOF on selected lines only “it continues to have a significant impact on ongoing digital gross margin levels”.
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