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Shoe Zone eyes international markets as it prepares for IPO

Value footwear retailer Shoe Zone is looking to open stores in Spain and Poland as it prepares to float next month.

The business, which currently has 554 stores across the UK and Ireland, is mulling European expansion for the first time, concentrating on coastal regions of Spain and Poland.

Yesterday (April 28) the company, which employs 4,100 employees across the UK and Ireland, confirmed it is seeking to raise up to £50m in an IPO on the Alternative Investment Market (Aim) in May.

Shoe Zone, which sells 20 million pairs of shoes per year, will offer institutional investors between 40% and 50% of the business.

Although the company declined to comment on how many international stores it hopes to launch, Shoe Zone will extend its property portfolio across the UK and Ireland by opening five new shops ayear for the next three years.

It will also close smaller stores as leases expire, relocating to bigger properties. Directors expect the move to larger stores will improve the cash contribution per store from £54,000 to £70,000 by 2017. The average size of the retail selling space in store, excluding stockrooms and back offices, is currently 1,400 sq ft.

Anthony Smith, chief executive of Shoe Zone, said the company was well placed to benefit from growth in the UK footwear market: “I am very proud of everything our management team and colleagues have achieved at Shoe Zone, and I am confident and excited about our future as we embark on the next stage of our development. We have a robust track record of consistent and profitable growth with a cash-generative business model that we expect will deliver an attractive yield for investors.”

Online sales are a top priority for the retailer, and these increased by 27% in 2013. In the year to January 31 2014, the average transaction value online was £18.45 – 57% higher than the average in-store sales in the same period.

In the year to October 5 2013, Shoe Zone generated sales of £193.9m, up from £189.4m in 2012. Profit before tax was £9.3m in 2013, a 66.1% increase year-on-year.

The company has appointed a new non-executive chairman and non-executive director ahead of the listing.

Ian Filby, who is currently chief executive of DFS Furniture Company, will join the retailer’s board as non-executive chairman. Charlie Caminada – who has over 20 years’ experience of brand building for entertainment, media and retail organisations and who currently holds the role of non-executive director at toy company Hornby Hobbies – will join as a non-executive director.

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