REDUNDANCIES AT CITY-BASED SHOE SHOP CHAIN

SHOE SELLER BASED IN CITY HIT HARD BY THE PANDEMIC

SHOE Zone is losing 20 stores and has carried out a redundancy programme at its Leicester head office.

The discount footwear chain said it had been hit by a double whammy of lockdown and supply chain disruption.

The business, which employs 3,500 people, has just announced a big loss for the past six months, having suffered even before the lockdown was imposed.

Last week it was able to reopen 416 of its 490 shops, with more due to open at the end of the month as Wales and Scotland ease their restrictions.

A trading update shows the business suffered pre-tax losses of £2.5 million in the half year to April 4 – when lockdown had only just begun – compared with a £1 million profit a year earlier.

Turnover for the period was £68.9 million, compared with £73 million the same time last year.

Chief executive Anthony Smith said “Covid-19 will continue to have an unprecedented impact on the UK economy and the retail industry.

“While the group has taken all possible steps to ensure the business will survive through the crisis and continue into the future, the impact is likely to continue to be felt for several years.

“As a result of this and following an extensive review of the store portfolio, Shoe Zone has closed an additional 20 stores during lockdown and will only open 470 when permitted.

“The group has also taken immediate action to reduce costs at head office and pause all areas of discretionary spend.

“Negotiations with landlords have also been accelerated and supplier orders reduced, cancelled or deferred as far as possible.

“The head office rationalisation programme has meant an additional £300,000 has been incurred in redundancy payments after the balance sheet date.

We have also undertaken a review of freehold values held, resulting in a write down of £900,000, giving an additional Covid-19 impact, not included in the first half results, of £1.2 million.”

The company said it has taken out a £15 million Coronavirus Business Interruption Loan, of which £10 million has been drawn down to date.

Other actions have included cancelling its final dividend, furloughing staff and using government tax deferment schemes.

However, pre-virus, in the year to February, the business said it had seen growth of 2.6 per cent.

Online sales have helped during the lockdown, thanks to a “very aggressive” buy one get one free promotion on all stock to generate cash as quickly as possible.

The promotion has now changed to selected lines, but is still doing well for the business.

Mr Smith said: “The board remains confident the group’s current level of funding will be sufficient to secure the future of the business, assuming sales return to a high proportion of previous sales during the next year.”

■ More business news, Page 24