Value footwear retailer Shoe Zone has set out a “refreshed” store strategy after suffering a £2.9m hit from its freehold property revaluation.
The company highlighted town centre renewal as a “key focus” for its revamped strategy, alongside its ongoing big-box store expansion drive and digital growth.
Statutory pre-tax profit fell to £6.7m from £9.6m during the 53 weeks ending 5 October, after the revaluation of its 17 freeholds resulted in a non-cash adjustment of £2.9m.
Revenue, on the other hand, inched up by 0.9% to £162m.
Shoe Zone traded from 500 stores at the end of the period, after opening 24 shops and closing 16.
The chain said it had reduced rents by 23.6% across 60 town centre lease renewals, delivering £631,000 in cost savings. The average lease length across its portfolio was 2.1 years.
However, Anthony Smith, chief executive of Shoe Zone, has said it is “stark that over the past 10 years the rates paid as a proportion of our rent have increased from 26.4% in 2009 to 54.3% in 2019”.
He called on the government to recognise “the impact of the increasing financial burden placed on businesses on the high street by successive governments and their policies”.
He said: “Despite rationalising our store estate, the value of rates paid has increased by £700,000 despite having 38% fewer stores and 30% lower sales.”
Shoe Zone launched six big-box concept stores during the year, meeting its stated target of 45, and plans to have 65 open by the end of 2020.
After trialling four premium, town centre “hybrid” store formats, the retailer aims to convert a further 20 of its traditional shops to the model by the end of 2020.
Smith said: “This new proposition, coupled with our ability to maintain the profitability of the existing estate by closing poorly performing stores, reducing rents at the time of the lease renewal, and lowering other costs through improved technology and increased productivity means that the Shoe Zone town centre offering will continue to contribute to the profitability of the business and deliver increased returns for shareholders.”
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