Shoe Zone is reaping the benefits of its transformation plan, posting strong results for the first half of its current financial year, ended last March 31. The U.K.'s largest discount shoe retailer made massive investments in its store portfolio, closing 35 loss-making units in its fiscal year ended in August 2017, while opening or refitting new locations. In the subsequent six months, it opened 4 units and closed 10 to end with 490 stores in the U.K. and Ireland. The management said that the remaining loss-making stores now make up only 5 percent of Shoe Zone portfolio's, down from 11 percent three years ago.
Meanwhile, the company's “Big Box trial” has 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 its urban stores. Shoe Zone now has 12 Big Box stores in operation, with three new units opened during the six-month period, and is aiming to add ten per year. The management said the company's new Big Box focus 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.”
The company's sales rose by 1.1 percent in the first half to 73.7 million pounds sterling (€84.3m-$98.4m), out of which £3.1 million (€3.5m-$4.1m) came from its Big Box stores. Multi-channel retail sales went up by 21 percent to £4.9 million (€5.6m-$6.5m). Shoe Zone also increased direct sourcing: footwear orders placed directly with overseas factories rose to 87.1 percent of total footwear orders in the half-year, up from 84.7 percent the corresponding period a year ago.
The company says that its ongoing strategic focus on the property portfolio continued to benefit the business, with careful management of leases and measured opening of core and Big Box stores. It also attributed its performance to a close management of costs and its ability to maintain appealing key price-points and multi-buy offers for its customers. Multi-channel revenue continued to grow profitably, especially via mobile devices, which remains an ongoing area of development for the business.
However, the product gross margin declined by 2.2 percentage points to 60.6 percent, due to higher write-downs early in the financial year and a change in the sales mix in the second quarter. The group posted a pre-tax profit of £955,000 (€1.1m-$1.3m) for the first half, compared with £309,000 in the same period in 2017.