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Store closures and weak trading hit Shoe Zone's bottom line

Shoe Zone’s pre-tax profit dropped 26% to £2m in the six months to April 4, as sales were hit by the planned store closures and difficult trading conditions.

The value footwear retailer issued a profit warning in April, blaming the mild weather. While sales volumes were up, it sold more of the cheaper, transitional products such as ankle boots than more expensive items such as long-leg boots.

That, combined with the planned closure of nine loss-making stores, drove its revenues down by 5.7% to £78.2m during the first half of the year.

However, its gross product margin edged up from 60.2% in 2014 to 60.5%.

Earnings per share decreased from 3.7p to 3.2p.

During the period Shoe Zone opened five new stores, relocated four and refitted 18.

It fully launched on eBay in October following a successful trial, while its Amazon store now represents 17% of multichannel revenue.

Chief executive Anthony Smith said: “We have made solid progress across the business in the first half and are particularly pleased with the performance in multichannel, where we saw a 30% increase in revenue. We continue to rationalise our store portfolio, closing loss-making grade three stores and opening more of our larger grade one stores.

“We remain focused on our growth levers: extending and improving our product range to leverage our market leading position in the value sector; driving efficiency in our property portfolio; operational investment in our warehouse facilities; and enhancements to our multichannel offering.

“Current trading has remained in line with expectations following our April trading update. The board continues to look to the future with confidence.”

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