Shoe Zone’s statutory profit before tax fell 84.2% to £0.3m in the six months to 1 April 2017, hit by the weaker value of sterling.
The value footwear retailer made an underlying profit before tax of £1.3m during the half-year, down 23.5% on the same period last year. Revenue dipped by 2.3% to £72.9m as it continued to rationalise its store estate.
Product gross margin increased from 61.1% in the first half of 2016 to 62.8%. Sales from non-footwear ranges, such as handbags and accessories, increased by 24% during the half-year.
Chief executive Nick Davis said: “The devaluation of sterling against the dollar has impacted the group’s statutory profits in the period. However, as we reach the annualised rebasing of this rate, we anticipate the ongoing impact will be significantly reduced.
“I am pleased with the group’s performance in the first half as we continued to actively manage the retail estate while driving profitable sales.”
As at 1 April, Shoe Zone had net cash of £4.6m – down from £8.1m during the same period last year – and no bank debt.
It said the lower cash balance was partially the result of paying a higher dividend, as well as the slightly delayed timing of the roll-out of its “Big Box” store concept. Stock has already been purchased for units that have yet to open.
Shoe Zone operates 504 stores and employs 3,500 people across the UK and Ireland. Since the start of its financial year on 1 October 2016, it has opened another store in the Big Box format, in Kirkstall, Leeds.
“Our Big Box trial has continued to perform well and, as such, we will accelerate roll-out of the concept during the second half of 2017,” said Davis. “We aim to have 10 Big Box stores by the end of 2017 and will continue with the planned growth in subsequent years.”
He concluded: “The group has traded broadly in line with management’s expectations since the period end and the board continues to look to the future with confidence.”