UK footwear retailer Shoe Zone reported a 2.7% decline in revenue to £161.32 million ($197.51 million) for fiscal year 2024 (FY24), compared to £165.65 million the previous year.
The company’s physical store sales took a hit, falling 6.5% to £126.1m from £134.8m in FY23. The decline was largely due to the closure of 26 stores within its retail network.
On a more positive note, digital revenue showed resilience with a 13.9% increase to £35.2m, compared to £30.9m the previous year.
The retailer’s pre-tax profits also saw a decline, at £10.11m compared to £16.18m recorded in FY23.
Show Zone attributed this contraction to several external and operational factors, including inclement weather affecting key seasonal sales, escalating container costs, rising energy prices, increasing currency depreciation due to higher capital investments and rising wages in line with increases in the living wage. National in the United Kingdom.
In response to these headwinds, Shoe Zone implemented cost-saving measures by renegotiating lease agreements resulting in lower occupancy costs. It expects to achieve additional savings when renewing the lease in the future.
The company received annual rent reductions totaling £0.4m across the refurbishment of 35 stores, reflecting an average reduction of 21%.
Its product margins improved slightly to 62.8%, from 62.3%.
Statutory gross profit fell by £5.7m to £35.52m with gross margin shrinking to 21.8%, down from 24.7%.
This was due to lower sales, higher excise duties and increased expenses related to digital sales, which were partially offset by lower store occupancy costs and lower inventory purchases.
The retailer’s administrative expenses were marginally lower at £18.6m due to lower dividend payments and foreign exchange losses, offset by higher wages, repair costs and digital-related expenses.
Distribution costs increased slightly by £0.4 million to £5.7 million due to increased distribution center wages associated with an increase in the National Living Wage.
Shoe Zone saw earnings per share for the financial year at 16.04p, down from 27.79p the previous year.
The retailer is focused on completing its store refurbishment and relocation plan by the end of 2026, aiming to reduce capital expenditure while strengthening its online presence following a strong digital sales performance.
It is planned to invest £6.5 million in the next financial year to refurbish the stores, improve infrastructure including IT upgrades and purchase new vehicles.
Shoe Zone concluded 2024 with 185 new and 112 original stores.
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