Shoe Zone Slashes Profit Forecast Amid Weak Consumer Confidence

Value-focused footwear and accessories retailer Shoe Zone has issued a profit warning, revealing that challenging trading conditions in June and July have significantly dented its earnings outlook. The company cited a further weakening in consumer confidence following the Government’s October 2024 Budget announcement, with inflation, high interest rates, and elevated savings rates reducing discretionary spending and footfall. As a result, Shoe Zone now expects adjusted pre-tax profit for the year ending 27 September to be around £2.5 million—half its previous forecast of £5 million—and has withdrawn its current dividend policy.

The warning comes despite generally positive monthly reports on UK retail sales, highlighting that while some retailers are seeing gains, others continue to struggle. Traditionally, low-priced chains have benefited when shoppers trade down during economic slowdowns, but this trend appears absent. Poundland and River Island have both faced store closures and sales woes this year, underlining the wider pressures on physical retail estates.

Shoe Zone noted that its 200th new-format store will open this month and stressed that refreshed stores outperform older ones. The company remains debt-free and reports higher cash levels than last year. However, with store estate costs high and consumer spending under strain, sustained recovery may hinge on a broader economic upturn—a prospect that appears distant.

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