Hundreds of jobs at risk as Shoe Zone reveals plans to close 90 stores

Shoe Zone, the Leicester-based discount shoe retailer, says it will shut 90 of its stores over the next 18-24 months, meaning the loss of around 600 jobs.

The firm, which employs 3,000 people across the UK, says revenue is down around 20% for its year ending October 5 after being hampered by first lockdown and then the tier-based system introduced by the Government. Because of this, the company is expected to make a loss of between £10-12m.

Shoe Zone will close 45 stores by April next year and then a further 45 over the next 12 months, cutting 20% of its estate.

The company has also announced it won’t reintroduce dividend payments until at least the 2024/25 financial year.

Anthony Smith, chief executive, said: “Shoe Zone has ended an incredibly challenging year with a robust plan and sufficient funding in place to ensure the future survival of the business. The exceptional growth in digital sales since the start of the COVID-19 pandemic demonstrates the flexibility of our operating model, and follows the decision to create an autonomous Digital department in 2019. However, it is very difficult at this stage to provide meaningful guidance on the future outlook, given the material uncertainty in the wider economy.

“The suspension of rates in April 2020 was a significant benefit for our business in FY20 and was in line with the government’s desire to save the high street. However, the government has announced the reintroduction of the antiquated business rates system in April 2021 and to make matters worse has delayed the revaluation. The consequence to Shoe Zone will be the closure of up to 45 stores prior to April 2021 and the potential closure of a further 45 stores in the 12 months following the reintroduction. In total this would represent the closure of up to 20% of our store estate in the next 18 to 24 months.

“In 2015 the government delayed the rates revaluation by 2 years which cost our business £1.25 million per year (£2.5m in total). The latest revaluation delay will be even more costly as rents during the period have fallen significantly further and consequently rateable values should have fallen broadly in line with rents. Never has the rating system been more unfair. Our rates as a proportion of rent have increased from 26.4% in 2009 to 54.3% in 2019 and forecast to be close to 60% in 2021. This is unsustainable for most high street retailers and closures will continue unabated until the government makes substantial changes.”