This would safeguard a huge proportion of suppliers’ future sales and could boost the coffers of several others. The deal also salvaged 2,700 jobs in the footwear industry. However, suppliers may still take a huge short-term hit from the deal, which saw Shoe Zone pick the business up debt-free.
One supplier said: “Stead & Simpson still owes us money for stock and it’s not clear what is going to happen about that.”
Several footwear suppliers have been brought to their knees following the collapse of Dolcis last week, and others have warehouses filled with tens of thousands of pairs of shoes once destined for the chains.
However, suppliers remained positive about the rescue. Clarks chief executive Peter Bolliger said the deal was “great news” for the sector, while Padders sales director Mike Rowe was pleased and relieved that the deal had been done by a footwear insider, rather than an investment bank. “Shoe Zone seems to want to keep its supply base tight and seems like a very genuine operator,” he said.
Smith’s no-nonsense style was evident in the letter he sent to suppliers this week. In it he wrote: “I expect people’s first reaction may be that we are mad and have bitten off more than we can chew, and therefore I feel it best to explain our rationale behind the deal to gain your support.”
He said that by June the Shoe Zone portfolio would have been rationalised, with the Shoefayre chain it bought last year swallowed up by Stead & Simpson, and Shoe Express integrated into Shoe Zone’s portfolio. The result will be an 845-store business with sales of £300 million operating under two models: value and middle market.
Smith added: “We intend to return Stead & Simpson to its former glory as a mid-market branded family footwear retailer… We are confident we can deliver success as a mid-market footwear retailer based on our Shoe Zone model, with leather footwear as the central element to our ranges.”
The letter was signed off with a clear message to suppliers. “I look forward to continuing to work with you all and hope you can play an even greater part in the future of both businesses,” he wrote.
Bolliger was confident Shoe Zone could pull off its new strategy. He said: “There is still a niche market to serve if you don’t go into shopping centres where you have to pay a lot of rent. Stead & Simpson and Peter Briggs have a lot of stores in small market towns, so Shoe Zone has a good chance.”