Jan 11, 2017
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Shoe Zone profits rise, omnichannel, Big Box stores and Europe expansion all key

Jan 11, 2017

Budget UK footwear retailer Shoe Zone overcame a tough retail environment in the 12 months to October 2016 but sales still fell 4.2% as it closed lossmaking stores during the first half.

But while sales dropped to £159.8m from £166.8m, the product gross margin strengthened to 62% from 61.5% and pre-tax profit rose 1.1% to £10.3m.

The retailer is opening larger locations and expanding abroad via Amazon

The margin and profits were helped by the average transaction value improving 5% during the year and non-footwear ranges continuing to grow with a 26% year-on-year rise. The company also made the most of supply chain efficiencies and said that footwear orders placed directly with overseas factories increased to 72.2% in 2016 from 62.1% in 2015.

And after closing those lossmaking stores, Shoe Zone also focused on making its remaining portfolio as profitable as possible. It opened 17 new locations, including 10 relocations, and completed 41 refits. It also saw an “encouraging” performance from its Big Box trial with two store openings during the period and another one since the fiscal year ended.

E-commerce was also boosted as it moved operations to a dedicated online distribution zone and overall multichannel revenue increased by 11%. There should be further increases this year too as the company has started trading on Amazon marketplaces in France, Germany, Spain and Italy.

CEO Nick Davis said the group's new branding is resonating well with its customer base and it will continue to update the estate through its store rationalisation and refit programme.

He added that the Big Box trial, which started in August 2016, is attracting a broader customer demographic and the firm plans to open a further six new stores across the UK in 2017.

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