Shoe Zone today showed how it saw its business move further online during lockdown. The retailer closed all 490 shops that were then open on March 24. It furloughed most of its staff but kept its digital team and distribution centre working. Since then, it has decided to close 20 of its shops, reopening 470 over the course of this month, and has made some head office redundancies.
At the same time, digital sales have gone from 6.5% of total company sales to 17% of the sales that were previously forecast for the lockdown period. By the end of the half-year, Shoe Zone had more than 1.4m “engaged users” on its database. The growth has come amid high levels of discounting: a buy one get one free promotion on all stock aimed to generate cash as quickly as possible. Although this strategy has now been reduced to selected lines only, it has had an impact on digital profit margins.
The update came as it reported its results for the six months to April 4. Revenue of £68.9m was down by 5.6% from £73m a year earlier as the multichannel discount shoe retailer was hit during a Covid-19 lockdown that saw all of its shops close and most of its staff furloughed. Before Covid, sales had grown by 2.6% in the year to February. First-half digital sales grew by 31.9% to £6.5m.
Shoe Zone, ranked Top50 in RXUK Top500, reported a first-half pre-tax loss of £2.5m, down from £1m a year earlier, and reported under new IFRS16 accounting guidelines. Since then it has written down the value of its freehold properties from £4.7m to £3.8m, a write-down of £0.9m that will be included in full-year results along with head office redundancy costs of £0.3m. Shoe Zone is renegotiating rents with its landlords and its payments to suppliers and says it believes the company is well-placed to face any retail downturn. It will not pay a half-year dividend to shareholders.
Since the end of its financial year, Shoe Zone opened 416 shops in England, Northern Ireland and the Republic of Ireland by June 15, and is to reopen in Wales on June 28 and Scotland on June 29. The retailer had £3.6m cash at the end of the half-year and has extended its access to cash through a CBILS loan of £15m, of which it has already drawn down £10m. It says it will continue to focus on restoring cash balances to a higher level than previously.
The retailer said in the half-year statement: "Covid-19 will continue to have an unprecedented impact on the UK economy and the retail industry. Whilst the group has taken all possible steps to ensure that the business will survive through the crisis and continue into the future, the impact is likely to continue to be felt for several years."