Shoe Zone issues profit warning as costs soar and sales fall

Leicester-based footwear retailer, Shoe Zone has issued a profit warning after being hit by rising costs and poor sales.

A trading update this morning (July 2) revealed that profits are expected to be £5m lower than anticipated.

The company says it’s faced cost pressures from increased container prices, driven by a reduced supply of shipping vessels and continued rerouting from the Suez Canal.

Alongside an increase in shipping costs, Shoe Zone has experienced weaker-than-expected spring-summer sales from April to June.

Shares plummeted by 20% in early trading following the announcement.

Its lowered expectations anticipate its adjusted profit before tax for the financial year ending October 2, 2024, will be £10m.

The firm witnessed more than a 9% decline in its share price upon releasing its annual results in May, following a profit warning issued two months earlier

Results showed a revenue of £76.5m for the 26 weeks ending March 30, 2023, reflecting an increase of 1.5% compared to the previous year. Store revenue declined by 2.8% to £59.4m. 

Shoe Zone closed the period with 309 stores, marking a decrease of 27 compared to the previous 12 months and 14 fewer than at the end of the previous year.