Shoe Zone sees shares on back foot after warning over profits slump

Shoe Zone has warned it expects annual profits to fall by more than 40% after the weather over the summer had an impact on sales.

The chain said pre-tax profits are expected to be "not less than" £9.6 million in the year to 28 September, which would be 41% lower than the £16.2 million reported a year ago.

It blamed tough trading over the key summer season, when it said unseasonal weather contributed to worse-than-expected sales, with full-year revenues down 2.7% at £161.3 million.

But trading was also held back by recent actions to trim its store estate, shutting 26 sites on a net basis to leave it with 297 at year-end.

Shoe Zone added that the drop in profits also came after a rise in its wage bill following April’s increase in the national minimum wage, as well as higher costs for shipping and energy.

Shares in the group fell as much as 13% at one stage on Tuesday, before paring back declines to stand 2% lower in afternoon trading.

Chairman Charles Smith said it was "a year of two halves".

"Second-half trading was below expectations due to unseasonal weather conditions, particularly at peak summer; however, our key Back to School period traded above expectations at the end of the year," he said.

The group, which employs around 2,250 workers, has been overhauling its estate, closing 53 sites, opening 27 and revamping 28 over the year as part of ongoing efforts to increase its number of new larger stores.

"We are continuing our strategy to expand the number of new format stores through relocations and refits of existing High Street stores," the company said.