The British footwear retailer Shoe Zone has reopened 416 stores in England, Northern Ireland and the Republic of Ireland after the easing of lockdown restrictions for the Covid-19 pandemic, while stores are due to reopen in Wales on June 28 and in Scotland from June 29. All the retailer’s stores closed on March 24 because of the pandemic.
After reviewing its network, Shoe Zone has decided to permanently close an additional 20 stores during the lockdown reducing the fleet to 470 locations. Negotiations with landlords have also been accelerated, to delay or renegotiate rents, and supplier orders cut, cancelled or deferred as far as possible.
The company said rebuilding cash balances “to a higher level than previously carried” is now a priority, along with repaying the £15 million (€16.6m-$18.8m) in debt taken on under the U.K. government’s coronavirus loan scheme, of which £10 million (€11.1m-$12.5m) has been drawn so far.
Shoe Zone confirms that it is still confident current funding is sufficient to secure the future, assuming sales return to a “high proportion” of previous levels over the next year. Net cash at April 4 was £3.6 million (€4.0m-$4.5m), up from £3.3 million a year earlier due to emergency measures, including the scrapping of £4 million in final dividends.
The company has decided to omit paying an interim dividend, and chief executive Anthony Smith warns the impact of the crisis could “continue to be felt for several years.”
A review of freehold values has led to a £900,000 (€996,000-€$1.13m) writedown, taking the cost of Covid-19’s impact to £1.2 million (€1.3m-$1.5m). This is excluded from interim results, along with £300,000 in redundancy payments made after the balance sheet date.
In the six months to April 4, statutory interim pre-tax losses widened to £2.5 million from £1 million as revenues fell to £68.9 million from £73.0 million, as supply chains were disrupted during the pandemic and customer numbers fell in early March. It notes that revenues in the five months to February were up by 2.6 percent year-on-year.
Online sales offset weaker revenues on the back of a “very aggressive” buy-one-get-one-free promotion on all stock “to generate cash as quickly as possible,” it adds. The company’s digital business grew by 31.9 percent to £6.5 million (€7.2m-$8.1m).
Shoe Zone ended the first half with 47 “Big Box” stores, an increase in store numbers of 81 percent year-on-year. The Big Box portfolio generated £9.4 million (€10.4m-$11.8m) in sales. One store was converted from “High Street” to “Hybrid” format in the period. The hybrid format is meant to be rolled out in more affluent areas.