Shoe Zone has reported widening losses as the Middle East conflict pushes up business costs and dampens consumer confidence. The high street retailer, which operates 259 stores, posted a pre-tax loss of £5.3 million for the six months to March 28, compared with a £2.3 million loss in the same period last year.
Revenue Decline and Store Closures
Revenues fell by 12% year-on-year to £62.9 million, partly due to 19 fewer stores following a series of closures. The company has been shutting shops and is reducing the size of its warehouse to reflect its smaller footprint.
Impact of Budget and Iran War
Shoe Zone blamed slower trading on reduced consumer confidence following two recent government budget announcements and the war in Iran. The conflict has led to fewer visitors to shops and less spending on non-essential items. Additionally, higher transportation costs and increased container prices are expected to weigh on financial performance for the rest of the year.
The retailer now expects an adjusted pre-tax loss of between £1 million and £2 million for the full year, having previously forecast a £1 million profit.
Broader Economic Effects
The closure of the Strait of Hormuz, a key international shipping waterway, has caused a surge in fuel costs, affecting many businesses reliant on fuel for manufacturing, transport, or supply chains. Last week, JD Sports also warned of potential price rises and weaker consumer demand if costs continue to increase.
Store Revamp and Future Plans
Shoe Zone is focusing on relocating and revamping its retail chain into newer, larger formats, aiming to complete this by the end of 2027. It is also reducing the size of its distribution centre to align with fewer stores and ensure future efficiency.
Shoe Zone shares fell approximately 3.5% in early trading.
