Shoe Zone is feeling the Brexit heat after its half-year profits dropped by 84 per cent due to soaring buying costs that came with a weakened sterling.
The footwear retailer saw pre-tax profits plunge to £309,000 in the six months to April 1, down from £1.9 million a year earlier.
This has been attributed to the fact Shoe Zone buys its stock from China in US dollars, which has been hit hard by devaluation of the pound since the EU referendum almost a year ago.
A store overhaul — including the closure of 12 outlets and the opening of nine, including one in the new “Big Box” format — also impacted its sales, which went down 2.3 per cent to £72.9 million.
“The devaluation of sterling against the dollar has impacted the group’s statutory profits in the period, however, as we reach the annualised re-basing of this rate, we anticipate the ongoing impact will be significantly reduced,” Shoe Zone chief executive Nick Davis said.
However, even with the impact of the devalued sterling taken out, the retailer’s underlying profits fell to £1.3 million from £1.7 million.
Shoe Zone added that high street’s challenging conditions will remain “uncertain given the political environment in the UK and across Europe in the coming months”.