Sales up from fewer stores
PROFITS DOWN DUE TO INFLATIONARY IMPACT OF MINIMUM WAGE
SALES are up at retailer Shoe Zone, despite the business having 52 fewer stores than a year ago.
The discount chain said sales were up almost 8 per cent at £75.4 million in the half year to April 1 – compared with the same period the year before – with online sales now accounting for almost a fifth of all revenues.
However pre-tax profits were down from £3.1 million a year ago to £1.5 million for the latest 26-week period.
It put the drop down to inflation – mainly the impact of the National Living Wage – and lower margins due to higher container prices and a weak sterling compared to the dollar.
In interim results for the half year, chief executive Anthony Smith said the Leicester business delivered a “robust and positive performance” in the period against a backdrop of “consumer uncertainty and macroeconomic volatility”.
The business now has 336 stores.
It is trading out of 226 of its Original style stores – which offer about 300 core styles per season – 66 Hybrids, with about 475 styles, and 44 Big Box shops with 650 styles.
Mr Smith said: “We are working to relocate and refit further stores in the second half of the year, together with a number of stores currently in the pipeline opening before Christmas.
“Our average lease length is 2.1 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 continue to take advantage of this and significantly improve our property portfolio over the medium term.
“We have accelerated our refit and relocation programme along with further investment in our digital and head office infrastructure.
“All of these are key to our strategy, and we expect to spend approximately 3 to 4 per cent of revenue annually on capital projects.
“We have continued to invest in our portfolio with more Original Shoe Zone stores converted to Hybrid formats.
“The results continue to be very positive and we continue to look for further opportunities to roll these formats out as planned.
“Our ultimate goal is a doubling of Big Box locations to approximately 100 and an increase in Hybrid stores to 200 in the medium term.
“We anticipate trading from a similar retail square footage, albeit from a reduced number of locations.
“Digital revenues grew by 12.7 per cent as we continue to invest in new product lines and additional brands as well as enhancing our platform with the introduction of a new returns portal, the development of a mobile app and adding new payment options, all of which will improve customer experience.
“Part of the success of our digital operation is our very efficient returns process which is complemented by our extensive network of stores.
“We have a returns rate of 11.9 per cent and the vast majority of these are returned to store, hence why our physical store network is critical to our future success.”