Despite the difficult retail environment in the U.K., hampered by uncertainty surrounding Brexit, both of these retailers reported relatively positive results, in contrast with retailers like Footasylum (see the article in this issue) and Asos (see the article in our previous issue), which had to resort to heavy discounting because they are positioned in a higher segment of the British market. Shoe Zone, a show retailer that operates mainly through its brick-and-mortar stores, and Boohoo, a generalist online retailer that sells shoes along with clothing and other fashion products, are both positioned in the lower end of the market.
Shoe Zone announced upbeat preliminary results for the 52 weeks ended on Sept. 29, 2018, with revenues up by 1.8 percent to £160.6 million (€181.4m-$206.8m), and statutory pre-tax profits jumping by 18.4 percent to £11.3 million (€12.8m-$14.5m). However, the gross margin inched down by 0.3 percentage points to 62.9 percent.
The management said that 2018 was another successful year for Shoe Zone, driven by a strong performance throughout the business, while operating in a challenging consumer environment. It added that this positive performance is a testament to the strength of its core business model and the effective focus on growing the Big Box and digital channels.
Digital revenues increased by 19.9 percent to £9.8 million (€11.1m-$12.6m). Shoe Zone also pointed out that its relatively new Big Box store format continued to perform well in the U.K. The stores tend to be located in retail parks and are on average double the size of many of the chain's urban stores.
The management said the new Big Box program is helping Shoe Zone to insulate itself against many of the structural issues faced by other retailers. It noted that there has been an increase in vacant out-of-town retail space over the last months, which is contributing to the company finding more space “at the right size and price.”
Shoe Zone indicated that a further 25 Big Box stores are already in the pipeline for 2019. It opened a total of 19 Big Box stores during its past fiscal year.