The British footwear retailer Shoe Zone reported wider first-half losses as Covid-19-related closures led to a sharp fall in revenues.
The company reported pre-tax losses of £2.6 million (€3.0m-$3.7m) for the six months to April 3, up from a £2.5 million loss a year ago. Revenues fell by 41 percent to £40.4 million (€47m-$57.3m) as stores were closed for at least 16 weeks during the period.
“During the six months we experienced significant disruption in the supply chain and a fall in consumer spending for a significant number of months in the period, particularly in January, February and March when all stores were closed,” explained chief executive Anthony Smith.
The business faced supply chain disruption when the Ever Given container ship blocked the Suez Canal in March leaving hundreds of vessels unable to deliver cargoes.
None of the company’s stores were open in the first two weeks of the fiscal second half. With the re-opening of business, trading started strongly but has since then ”settled down to a more mixed picture of good High Street and retail park sales but weaker shopping center performance,” Smith added.
Shoe Zone cut its store estate by 38 stores to 422. The company added that it was behind on rental payments as it continued negotiations with landlords and suppliers. It also completed its exit from the Republic of Ireland, with all stores and the shoezone.ie website now closed.
Physical store revenues fell to £22.8 million (€26.4m-$32.3m) in the first half from £63.3 million a year earlier. However, digital and warehouse teams operated throughout the lockdown with revenues from digital operations jumping to £17.6 million (€20.4m-$25m) from £5.5 million.
Digital growth will continue to be a major part of Shoe Zone’s future strategy along with its focus on the expansion of its ‘Big Box’ and ‘Hybrid’ stores, said Smith. But, the rollout of these formats will occur at a lower pace than forecast “due to cash constraints”, he added.
“We enter the second half of the financial year with the hope that we have seen the worst of the Covid-19 impact and look forward to the stores getting back to what we would call ‘normal’ trading conditions, with no further lockdowns.”
The company had a net cash position of £4.1 million (€4.7m-$5.8m) at the end of the first half. Shoe Zone took advantage of U.K. government assistance initiatives such as the jobs furlough scheme, business rates holiday, retail grants and value-added tax payment delays. As part of its cash preservation policy, it decided not to pay an interim dividend.