Shoe Zone swings to full-year loss after Covid closes its stores

Shoe Zone has warned profits are unlikely to return to pre-pandemic levels for the "foreseeable future", after it tumbled into the red.

The Aim-listed retailer said revenues for the year to 3 October 2020 decreased 24% to £122.6m, while the underlying loss before tax came in at £14.6m, compared to a pre-tax profit of £6.7m a year previously. The loss per share was 23.8p against last year’s earnings per share of 11.4p.

Revenues were hit after lockdown restrictions closed its stores, although digital revenues rose 82% to £19.3m.

Chief executive Anthony Smith said: "It is disappointing I am reporting on a year impacted by Covid-19. Despite this there are positives, such as the continued growth of digital."

However, he added that the company now had debt on the balance sheet for the first time in 15 years, which would affect its ability to pay dividends.

"The effect of Covid-19 has meant the business has taken on debt of £12m," he said. "Our defined benefit pension schemes remain at deficit of £10.6m and will need greater support.

"Until the business is debt free, has tackled the pension deficit, repaired the balance sheet and restored capital expenditure, the business will not be in a position to make dividend payments. We anticipate this will not be before 2025."

Profits were also unlikely to improve in the short term. "We do not expect profits will return to pre-Covid-19 levels for the foreseeable future," warned Smith. "Lockdown in November and January to mid-April so far in this financial year makes a return to profit extremely unlikely until the financial period ending on 2 October 2022 at the earliest."

As at 1015 GMT, shares in Shoe Zone were off 7% at 69.74p.

Shoe Zone also announced on Monday that it had appointed Terry Boot as its new finance director, replacing former incumbent Peter Foot who left earlier this year. Most recently, Boot was chief executive of The Company of Master Jewellers.