Shoe Zone shares fell over 40 per cent on Wednesday after the retailer said it has shut stores in response to soaring wage costs following the recent Budget and warned over profits once again.
The group, which employs around 2,250 staff across 297 stores, said the Chancellor’s move to hike employers’ national insurance contributions and increase the minimum wage had led to ‘significant additional costs’.
It said: ‘These additional costs have resulted in the planned closure of a number of stores that have now become unviable.’
Shoe Zone did not reveal how many stores had shut or the number of workers affected.
However, the group had already been closing loss-making stores over the past year, revealing in October that 26 sites had been shut on a net basis – 53 closed, less 27 opened – in the year to 28 September.
Shoe Zone said it had also seen ‘very challenging trading conditions’ since the end of September as shoppers curbed their spending amid unseasonal weather hit.
In the red: Shoe Zone shares fell over 40% on Wednesday
The retailer claimed consumer confidence had weakened further since the Budget in October.
Amid a challenging trading backdrop and upcoming higher wage bill, Shoe Zone said its annual profit would be lower than expected. The retailer also cancelled its final shareholder dividend payout for 2023-24.
Shoe Zone said its underlying pre-tax profits were now set to be not less than £5million, down from £10million previously expected for the year to 27 September next year.
The profit warning marked the second in as many months, after it lowered guidance in October for the year to 28 September 28, blaming poor summer weather for lower sales.
Shoe Zone said annual sales fell 2.7 per cent, which it expected will leave 2023-24 profits at ‘not less than’ £9.6million against the £16.2million reported the previous year.
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