Shoe Zone feels Brexit impact as profits fall 84%
Retailer Shoe Zone has seen half-year profits tumble by 84% after the Brexit-hit pound sent its buying costs soaring and sales fell amid a store overhaul.
The Leicester-based group saw pre-tax profits plunge to £309,000 in the six months to April 1, from £1.9 million a year earlier.
Shoe Zone buys its stock from China in US dollars and has been hit hard by sterling's fall since the EU referendum.
Sales also came under pressure, down 2.3% to £72.9 million, as a restructure of its store estate saw the group close 12 outlets and open nine, including one in its new "Big Box" format.
Nick Davis, chief executive of Shoe Zone, said: "The devaluation of sterling against the dollar has impacted the group's statutory profits in the period, however, as we reach the annualised re-basing of this rate, we anticipate the ongoing impact will be significantly reduced."
Even with the sterling impact stripped out, underlying profits fell to £1.3 million from £1.7 million.
The group also cautioned that high street conditions will remain "uncertain given the political environment in the UK and across Europe in the coming months".
Shoe Zone's currency woes were compounded as it also bought extra stock to fit out its new Big Box stores.
The group has three of these new format outlets, the most recent opening in Kirkstall, Leeds, and it plans to have 10 by the end of the year.
It is also increasing sales of non-footwear ranges - such as handbags, school bags, lunch boxes, purses and accessories - which notched up growth of 24% in its first half.
Shoe Zone, which has 594 stores across the UK and Ireland, added that it is now selling across Europe through Amazon Marketplace.