Value footwear retailer Shoe Zone announced pre-tax profits of £2.7m for the first six months to April 5, crediting a ‘retail friendly’ property market for the increase.
The results, announced on June 24 and the first to be revealed since its float in May, showed pre-tax profits had shot up from the £0.2m recorded for the first half of 2013. Sales declined by 19% to £82.9m, reflecting the closure of 154 loss-making stores between October 5 2012 and October 6 2013 – the majority of which were former Stead & Simpson stores.
Chief executive Anthony Smith told Drapers the number of empty units on the high street has been beneficial, allowing it to take new shops in higher-footfall areas and move existing units from secondary to primary locations as “demand from the big players” for this space is no longer there.
It is also taking advantage of shorter five-year leases with no rent review offered by landlords, meaning loss-making stores can more easily be relocated.
Two stores have been relocated, three stores opened and 19 shop refits have been carried out so far this year. A further three stores will be opened in new territories across England, the first two of which will be in Southport, Merseyside, and London’s Elephant and Castle this summer. It will relocate a further 10 or 12 stores before September.
Smith said the company was on track to relocate or refit 50 stores over its financial year, in line with medium-term plans.
“We’re relocating a lot of stores as we’re benefitting from the retail-friendly property market,” he said. “We can move to bigger locations, often increasing our average size from 1,200 sq ft to 2,000 sq ft. The tough conditions on the high street have meant landlords have been more flexible.
“You have to keep on top of the portfolio to keep it looking sharp. There has always been a strong consistency across Shoe Zone stores, which has been a failure on the part of many of our competitors.”
Smith said he was “investigating” markets in Spain and Poland, and the first step into these territories would be a website.
“Our entry there would be through online, but we would like to support that with physical stores. We would need to test these regions first before expanding further,” he said.
In the 10 weeks to June 14, like-for-like sales and margins were in line with management expectations. Online sales were “strong” and ahead of market projections.
It operates from a portfolio of 554 stores and employs approximately 4,100 people across the UK and Ireland.