Shoe Zone recovers in latest half-year as omnichannel strategy pays off
Value-focused footwear retailer Shoe Zone appears to be recovering from the pandemic and making the most of consumer interest in budget ranges.
The company reported its results for the half-year up to 2 April on Tuesday and the figures looked generally good.
Revenue rose 73% to £69.9 million with store revenue of £58.1 million. Digital revenue ‘normalised’ at £11.8 million, down from £17.6 million during the prior year’s half that was affected by lockdowns. The company made profit before tax of £3.1 million, much better than a £2.6 million loss a year earlier.
Of course, it was helped by the fact that the company’s shops were able to trade for the full 26 weeks this time compared to only 10 weeks in the same period of the previous year. And the fact that it has been reshaping its estate also provided a boost. For instance the number of ‘Big Box’ stores was stable at 45 but it had 35 ‘Hybrid’ stores compared to 22 at the end of the previous financial year. And it's ‘Original’ store format was down to 308 from 343.
Having closed 30 poorly-performing stores and opened eight new Hybrid formats, it's getting its chain of stores into the shape it wants. And in negotiating new leases it has made renewal savings of £0.4 million with an average reduction of 37%.
And on Tuesday the company said it’s “accelerating” store relocations and refits”. Its ultimate goal is a doubling of Big Box locations to approximately 100 and an increase in Hybrid stores to 200 in the medium term. It expects to be trading from a similar sales square footage, but from a reduced number of locations.
Not that the firm’s profitability is completely focused on its shops as it's also putting in place infrastructure changes at its head office, and further investing in digital.
“All of these areas are key to progressing our strategy and we will commit to spending at least 3% of turnover annually on capital projects,” it said.
And the investment in digital certainly makes sense. Digital growth fell back in the half, as expected as it reopened all stores, and is now back to the normalised level expected. But digital is still 114.5% higher on a two-year basis.
Yet the firm’s omnichannel strategy is also key as it ensures that all channels work together. It said that “part of the success of our digital operation is our very efficient returns process which is complemented by our extensive network of stores. We have a returns rate of 10.9% and the vast majority of these are returned to store, hence why our physical store network is critical to our future success”.
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