Shoe Zone profits down due to “increased financial burden” CEO says

Shoe Zone Anthony Smith trading update
In the year to October 5 2019, Shoe Zone's underlying pre-tax earnings slid to £9.6m versus £11.3m the previous year
// Shoe Zone blames profit drop on the burden of increased business rates
// Sales edged up 0.9% to £162 million

Shoe Zone chief executive Anthony Smith has blamed the fall in its annual profits on “the increasing financial burden placed on retailers by successive governments”.

In the year to October 5, the footwear retailer’s underlying pre-tax earnings slid to £9.6 million versus £11.3 million the previous year.

Sales edged up 0.9 per cent to £162 million.

READ MORE: Shoe Zone full year revenue rises marginally

Smith, who returned to running the business last year, said he was confident in Shoe Zone’s potential but called for government action to address the burden of business rates, which have increased in the past decade.

”Despite it being a difficult year for Shoe Zone, the business has achieved revenue growth, and delivered underlying profit before tax marginally ahead of our revised expectations following our revaluation of freehold property,” he said.

”Alongside the continued momentum in big box expansion and digital growth, town centre renewal is the third key focus for our refreshed strategy.

“Following a successful trial of four ’hybrid’ stores, in 2020 we plan to convert a further 20 of our traditional stores to this more premium town centre model.

”Town centre stores remain an important component of our proposition and we don’t agree with doomsayers referring to the inevitable ’death of the high street’.

”However, it’s stark that over the past 10 years the rates paid as a proportion of our rent has increased from 26.4 per cent in 2009 to 54.3 per cent in 2019.

“Despite rationalising our store estate, the value of rates paid has increased by £700,000 despite having 38 per cent fewer stores and 30 per cent lower sales.

”For the retail sector to continue to play its important role in the UK economy, and town centres to serve their communities, it is vital that government recognises the impact of the increasing financial burden placed on businesses on the high street by successive governments and their policies.

”The core business model remains robust and combined with the refreshed strategy, the board is confident that this enhanced strategic focus will improve customer experience, increase market share and drive shareholder returns.”

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