Shoe Zone interim profit slumps on weaker pound

AIM-listed value footwear retailer Shoe Zone saw profits plunge in the 26 weeks to 1 April as it took a hit from the weakening of the pound.

Statutory pre-tax profit fell to £309m from £1.9bn the year before on revenue of £72.9m, down from £74.6m as sterling's drop in the aftermath of Brexit took its toll. In addition, revenue was dented by the continued rationalisation of the retail estate.

As part of the restructure of its estate, the group has opened nine new stores, one of which was its Kirkstall Leeds Big Box store, completed three relocations and closed 12 stores.

The company lifted its interim dividend to 3.4p per share from 3.3p the year before.

Chief executive Nick Davis said: "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. 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.

"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."

Shoe Zone said its Big Box trial has continued to perform well and it will accelerate rollout of the concept during the second half of 2017 with the aim of having 10 Big Box stores by the end of the year.

Shoe Zone said the retail market remains uncertain given the political environment in the UK and across Europe in the coming months. Trading continues to be broadly in line with expectations, with the cost base benefitting from the new rates regime, albeit this may be partially offset by the potential impact of increases in shipping costs.

At 0840 BST, the shares were down 7.2% to 174p.