Shoe Zone, a high street retailer with 259 stores, reported widening losses as revenues fell by 12% following the closure of 39 branches and slower trading due to consumer confidence affected by the latest Government budget announcements and the war in Iran.
High street retailer Shoe Zone has warned over the Middle East war pushing up business costs and adding to shoppers’ worries as it reported widening losses.
The chain, which runs 259 stores, has been shutting shops and is in the process of cutting the size of its warehouse. It reported a pre-tax loss of £5.3 million for the six months to March 28, widening from the £2.3 million loss reported the same time last year. Revenues fell by 12% year-on-year to £62.9 million, which was partly due to there being 19 fewer stores than the year before after a series of closures.
The chain closed 39 branches last year. But Shoe Zone also blamed slower trading on consumers being less confident to spend as a result of the two latest Government budget announcements and, more recently, the war in Iran. This was resulting in fewer visitors to shops and less spending on nonessential items, according to the firm.
At the same time, it told investors that the conflict had resulted in higher transportation costs and pushed up the price of containers used for shipping, which it expects to weigh on financial performance for the rest of the year. The retailer said it was now expecting to report an adjusted pre-tax loss of between £1 million and £2 million for the full year, having previously guided towards a £1 million profit.
The conflict and the closure of international shipping waterway the Strait of Hormuz led to a surge in the cost of fuel, which has been impacting a range of businesses who use fuel for manufacturing, transport, or across their supply chains. Last week, sports fashion retailer JD Sports, which is well known for selling trainers, warned over the potential for higher prices and a weakening of consumer demand if costs continue to rise.
Meanwhile, Shoe Zone highlighted efforts to relocate and revamp its retail chain into newer and bigger formats which it wants to complete by the end of 2027. At the same time, it said it was in the process of reducing the size of its distribution centre to reflect the fact that it had fewer stores and to “right size” for the future. Shoe Zone shares were down about 3.5% in early trading.
Shoes Retailer Middle East War Closures Retail Chain Government Budget Announcements Confidence Spending Nonessential Items Retailer Higher Transportation Costs International Shipping Waterway Surging Cost Of Fuel Sports Fashion Retailer JD Sports Relocation Revamp Retail Chain Consumer Confidence Weakening Of Consumer Demand
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