Shoe Zone’s pre-tax profit fell 4.5% year on year to £1.9m in the six months to April 2 as it closed lossmaking stores and invested in upgrading its remaining portfolio.
The value footwear retailer closed 23 lossmaking and temporary stores during the period, leaving it with a total of 518. As a result, its revenue declined by 4.6% to £74.6m.
Shoe Zone said it worked to improve its store portfolio during the period, moving 53 of its stores into the “Grade 1” category. This will continue into the second half.
Rent on renewals fell by 29.9% on average, representing a £222,000 cost saving. Rent as a percentage of turnover is now 14%, down from 14.7% in the first half of 2015.
Shoe Zone said it is on track to launch its new “big box” format in three locations in August, which will create a “new avenue for growth”. It previously indicated the locations would be in Devon, Kent and somewhere within the M25, but outside of central London.
It also invested heavily in the infrastructure at its distribution centre in Leicester, installing a new online fulfilment area, which resulted in efficiency savings.
Mobile devices or “non-desktop” accounted for 70% of online visits to Shoezone.com, up from 64% during the first half of 2015.
Its product gross margin increased from 60.5% to 61.1% and it ended the half with a 37.3% increase in net cash to £8.1m.
Chief executive Anthony Smith said: “We have continued to make good progress with our store portfolio upgrade and rationalisation programme and I am pleased with the performance of the group in what was another difficult period for the clothing and footwear industry.
“[The big box format] will allow Shoe Zone to access the important out of town market, creating a new avenue for growth. We will provide an update on this trial at the full-year results in January 2017.
“The group has traded in line with management’s expectations since the period end and the board continues to look to the future with confidence.”