LONDON (Reuters) – Small British discount retailer Shoe Zone on Wednesday highlighted “very challenging trading conditions” in the first half of December, potentially unsettling nerves across the wider sector with just a week to go in the countdown to Christmas.
Shoe Zone, which trades from 297 stores across the UK and online, warned on profit for its 2024/25 year and its shares crashed 39%.
It said that in October, November and the first half of December, it experienced “very challenging trading conditions, principally a weakening of consumer confidence and unseasonal weather, both of which have decreased revenue and profit.”
Veteran independent retail analyst Nick Bubb said Shoe Zone’s profit alert “could rattle a few nerves in the sector.”
Shoe Zone said consumer confidence had weakened further following the new Labour government’s tax raising budget at the end of October, echoing comments from Sports Direct owner Frasers earlier this month.
Analysts expect Britain’s listed food retailers – market leader Tesco, No. 2 Sainsbury’s, Marks & Spencer and online player Ocado – to continue their strong performances through 2024 and perform well at Christmas.
However, they are concerned that the consumer mood around non-food retail may have darkened after the budget, despite survey data saying it improved in December.
Shoe Zone said additional costs from budget measures increasing employer national insurance contributions and the minimum wage have resulted in the planned closure of a number of stores.
It cut its forecast for adjusted profit before tax for its 2024/25 year to not less than 5 million pounds from 10 million pounds ($13 million) and said it would not pay a final dividend for its 2023/24 year.
($1 = 0.7882 pounds)
(Reporting by James Davey; Editing by Tomasz Janowski)
