Shoe Zone sees FY profit ahead of views, announces £4m special divi

Value footwear retailer Shoe Zone said on Monday that full-year pre-tax profit should be ahead of market expectations following a good second half, as it announced a £4m special dividend.

In an update for the year to 29 September, the company said it expects to report a 1.8% rise in revenues to around £161m thanks to a strong performance across the business, with both physical and digital channels showing growth allied with the completion of the loss-making store rationalisation programme.

Shoe Zone now expects to report a full-year pre-tax profit ahead of market expectations and in excess of 11m. Analysts had pencilled in pre-tax profit of £10.1m.

The group said this was driven by a stronger revenue and margin performance from the spring/summer ranges and the benefits from progress achieved through the further development of its foreign exchange hedging policy.

The company closed the year with a cash balance of around £15.7m compared to £11.8m in 2017. As a result, it expects to return £4m of excess cash to its shareholders via a special dividend next March, subject to approval at the annual general meeting.

Chief executive officer Nick Davis said: "The group has performed well through the year with a particularly strong performance in the second half. Our strategy of growth through Big Box expansion and online channels allied with excellence in the operations of the core Shoe Zone estate provides us with a clear path for the future. I am particularly pleased that the continued strong cash conversion has enabled the Board to outline its intention to propose its third Special Dividend.

"The new financial year has started well and there are a further 14 Big Box openings planned. We look forward to updating shareholders on progress at the time of our Final Results in January."

Edison Investment Research analyst Paul Hickman said: "Shoe Zone has demonstrated that a closely managed and soundly positioned terrestrially based retail operation can still deliver excellent results."

At 0940 BST, the shares were up 10.6% to 182p.