The rollout of Shoe Zone’s “big box” out-of-town store format will boost sales and profits in 2017, its chief executive Nick Davis said today.
“The new format [which allows Shoe Zone to stock third party brands alongside its own-label product] is bigger, more premium, more modern and more inviting,” he said. “It is broadening our customer base.
“The format is profitable already, so we’re excited to see the momentum build.”
Davis was speaking to Drapers after Shoe Zone revealed that sales slipped 4.2% to £159.8m for the year to 1 October 2016, but its profit before tax edged up 1.1% to £10.3m.
The retailer has opened three big box stores since it launched the trial in August 2016, in Launceston in Cornwall, in Durham and in Kirkstall Bridge in Leeds. Six more are planned for this year, including in Dover and Sheffield, and a further 10 will open in 2018.
During the year, Shoe Zone closed eight loss-making stores, relocated 10 and opened seven new shops. Davis said there were a further 40 loss-making stores in its portfolio – 20 of which will “close quickly” – and he expects the top line at the firm to stabilise.
Online is also growing for Shoe Zone: ecommerce sales were up 11% on 2015. Davis said this has improved further since the end of the financial year.
During the period, online operations moved to a dedicated distribution zone within the warehouse which improved efficiency and since the end of the financial year the retailer has started trading on Amazon in France, Germany, Spain and Italy.
Shoe Zone will continue to expand its non-footwear offering in 2017. Sales of accessories, including handbags, wallets and socks were up 26% on 2015. In the autumn of 2016, Shoe Zone launched scarves into selected stores and they quickly sold out.
Davis said he would focus on improving Shoe Zone’s store estate to weather the challenging retail market in the year ahead.
“Multichannel, the big box stores and optimising our store portfolio are crucial for us,” he added. “Our strong value proposition works well whatever the economic environment and, since the living wage was introduced, we have seen a more stable performance (as our staff are our best customers).
“We’re expecting further inflation in the economy, but that won’t really hit our shoppers.”