Shoe Zone (LON:SHOE) Anybody like to comment on why the share price has been falling this week? I am a holder and can't find any news. They look sound to me & I will keep an eye on the situation. I might buy some more if the management continue to perform well.
I am a keen & experienced investor. I love my spread sheets, and like to think that I know what I am doing. I wouldn't be offended to be described as a bit geeky. Mostly I do well, but I always strive to do better. Married male. Born 1957 England. Good career in industry for 35 years. Been successfully investing for about 30 years. I chose to retire from salaried employment at age 57 to look after my investments. I consider myself to be quite analytical / logical / mathematical, but also take into account how the world is likely to change & how people behave. I always follow my processes before taking action. more »
Perhaps we've found out today why the price has been falling? Personally, I think that it's overdone - I'd be interested to see what other think.
Regards,
DS
Well for me , the CEO has lost a lot of credibility - In the January pre-lims he said "Despite the well documented warm start to the Autumn/Winter season we believe that 2015 will be a further year of growth for the Group..."
And now, just 3 months later he says.."The warm weather conditions had a material impact on autumn/winter trading which slowed revenues in the first half." Surely rather than dismiss the warm weather he should have been more cautionary in his statement especially as he was already 2 months in to the half year, back in January. Overall very disappointing!
A fall of close to 30% looks overdone.
Sales volumes were up.
It's the sales mix that was down because of the mild weather, not sure what the BOD and CEO can do about that.
Margins "remained robust".
The inventory position is sound, so obviously their ordering systems are agile.
The cash position is strong.
Online growth is strong, "ahead of schedule".
Profit will be below expectations. Note that they don't say it will be below that of the previous year.
The store expansion programme is making "good progress".
It looks to be a kind of Primark but for shoes.
I also bought this morning, at 186p.
The key thing to me is that the hiccup doesn't impact the fundamentals of this business. They remain as strong as before. So it is a buying opportunity at the right price. What is a fair price on today's news? My calcs show anything below 195p is worth a punt.
Incidentally, ABF's HY results today state this in respect of their "retail" (i.e. Primark) operation:
"Like-for-like sales for the group were level with last year and were held back by unseasonably warm weather across northern Europe last autumn"
Exactly as SHOE is reporting, I'd guess for about the same target market.
Hi Jane et al...
when I saw the RNS (I'd been watching for a while) i thought a fall of 10-15% was on the cards. When I saw the near 30% fall, I thought I'd missed something.
I understand what others are saying about the confident outlook and I have sized my initial holding accordingly - I've also e-mailed the company to try and get some more detail.
I sliced the EPS of 20pps by 25% to give 15pps and did the same with the dividend to give 9pps. @ 191 pence gave me a PE of under 13 and a yield of nearly 5%
We'll see where this goes as broker adjust their figures, I'm sure.
Sully, this is from FT Alphaville's "Markets Live" and contains comment from Numis:
"BE
Shoe Zone
BE
Which in common with Pets At Home is another one of those retailers that joined last year and I still haven't had the strength of will to look at properly.
BE
Today we get a weather warning.
BE
People don't buy shoes when it's cold. Who knew?
PM
Wot?
BE
Here's Numis to explain.
BE
Shoe Zone has reported difficult trading through its H1, reflecting an adverse sales
mix through the winter and spring. Interim and FY15 profits are likely to be below
market consensus and we reduce our PBT forecast by over 20% for the current year
and c.15% pa thereafter, with our dividend numbers also adjusted lower. We view
this as a footwear market-related problem. The strategy continues on track, and the
group has continued to control markdowns, working capital and cash. We place our
TP and recommendation Under Review pending the potential share price reaction.
BE
Tough winter and early spring/ summer: Shoe Zone has reported that the warm
autumn/ winter weather has adversely affected sales of higher-ticket items, and the
cold temperatures in March have reduced demand for the early spring/ summer ranges.
Sales volumes have increased slightly, but average selling prices (ASP) have fallen,
leading to H1 sales being below expectations (we estimate down 5-6%). The group did
not reduce LFL prices and markdowns have not increased materially despite heavy
discounting elsewhere in the market (we estimate H1 gross margins to be stable).
Operating costs are on plan (we estimate broadly flat overall), but the historically tight
controls limit the scope to claw back the effect of slower trading.
BE
FY15 and outer year expectations reduced: The group consequently expects lower
y-o-y profit at the interims and FY15. We forecast interim PBT of £2m (v. £2.7m in H1
FY14) and downgrade our FY15 PBT estimate by 23% from £13m to £10m (£11.4m
in FY14), with the sales effect being magnified by the P&L structure (gross margin greater than 60%, EBIT margin
E
…. greater than 7%). The group aims to maintain its 60% dividend pay-out ratio,
suggesting 9.5p for FY15 (against our previous estimate of 12.3p). We also adjust our
outer year PBT and dividend forecasts to reflect the base effect and the assumption
of a slow recovery in industry ASP.
BE
Market backdrop and self-help: Although there are no directly comparable quoted
businesses, anecdotal evidence suggests that this is an industry-wide issue. In Shoe
Zone's case, ankle boots priced at £14.99 have sold well but higher ASP items,
e.g. long leg boots priced between £19.99 and £24.99 have struggled. Meanwhile,
summer lines started slowly during March. The relatively low fashion content and strong
inventory controls have ensured that the group has contained the effect on gross
margins, working capital and cash. The core strategy of opening more profitable larger
format stores and driving online sales continues to be executed successfully."
Hi all -
I took a position yesterday @185. yet I can't seem to shake off the monkey on my back which keeps repeating , "profit warnings come in threes" !
If there is no sign of a bounce today, I will take a small loss & liquidate before close of play.
I love this bit from Numis:
We place our TP and recommendation Under Review pending the potential share price reaction.
Clearest statement I've seen yet of the truth of how brokers set target prices - wait and see what the market thinks!
Hi Jane,
Thanks for that....
It's interesting, to me anyway that Numis has reduced FY 16&17 figures, too. I'm fearful that the company was set up with expectations too high and they are now taking the opportunity to reduce said expectations.
I spoke to the PR people today. They seemed to suggest that it was better to set the expectations lower with a view to beating them - they didn't give me anything other than was in the release.
I did point out that below management expectations, as far as I'm concerned means around 10% below forecasts, yet Numis, who will have spoken to the company has reduced their forecasts by over 20% something doesn't smell right here, perhaps why the shares have been marked down again today.
Overall, I don't like the lack of transparency from Shoe Zone (LON:SHOE) that I get with Next (LON:NXT). I'll be giving my holding some thought over the next few days....if it does bounce towards £2 I may well escape but time will tell.....
Regards,
Sully
Yes, I did. Got my fingers burnt last year by dithering too long, so now I stick to the plan and take a small loss. Could be the wrong thing to do, but hey, hindsight is a wonderful thing.
I emailed the CFO at SHOE today, asking why, with two days to go before the report, the SP had fallen almost 10%. I had been unable to find any information to explain it. The reply was that they too have no clue and have asked their brokers to comment further. I still have faith in this company.
Tango -have you bought any shoes from the company to check the quality. First hand research will always pay off.
I have recently bought shoes from them. The quality is not great but they look good and are amazingly cheap. Should get a few months out of them. I recently bought and sold the shares for a good profit and am seriously considering going back in at this price. I too was surprised by the recent price drop. Perhaps they are just being linked to other underperforming retailers.
Fundamentally there seems nothing wrong with the company, however I've learnt to be very wary of sudden SP movement on no news. The monthly chart shows a very obvious point of support, (the weekly one ditto), therefore in my eyes a technical bounce is possible at this price, however the strength of the bounce (if one occurs) over the next few days will confirm a rally or a plunge to further lows. My rule of thumb in situations such as this, is to sit on my hands and wait. It has saved me from painful losses in the past, but obviously trimmed my profits too, it all depends on your attitude to risk and your investment time horizon.
hayashi- No. However, I have checked out the opposition and been appalled by the poor quality of shoes costing four times as much as the cheap lines SHOE sells.
My own shoes? I have a left foot half a size smaller than my right, so in 2005, I bit the bullet and bought my very first pair of made to measure shoes. They have been bliss since the first time I wore them and I walked around London all day yesterday in them. They cost me £400 and have been re-soled twice. I noted in a shop in Jermy Street, a decent pair of "off the peg" brogues for £325.
The reasons I have faith in SHOE include some insight into the CEO and his family with whom I shared an employee and a conviction that there is a massive market for very cheap shoes and that shoes in the price range £50 to £150 are not great.
Considering the repeat of the same mild winter conditions as last year, I find today's results reassuring and the plans for expanding stores and widening the online scope sound reasonable and upbeat. It may not be much but the trend is good and a special div is most acceptable. From the results:-
"As a result of our performance in the year and strong cash position, the Board is proposing two dividends to be paid being a final dividend of 6.5 pence per share, resulting in a total dividend for the year of 9.7p per share and a special dividend of 6.0 pence per share.
The board is proposing a special dividend in order to distribute surplus cash generated from our strong cash conversion. We believe that 11m is currently the maximum level of cash that the business requires to operate effectively and so excess above this level will be paid to shareholders by way of a special dividend when appropriate. Therefore, the special dividend of 3m, being 6.0 pence per share is being proposed.
The dividends will be paid to shareholders on the register on 26 February 2016, payable on 16 March 2016 if approved at the Annual General Meeting to be held on 4 March 2016. The shares will be ex-dividend on 25 February 2016 "
So, the SP has begun to head back to where it was and maybe we'll never find out what the sudden drop meant.
The results today have been well received reflecting the recent weakness and the special dividend. Buying shoes must be a personal thing but I've always liked good shoes and tried to keep them. One can form a very negative view of people who wear cheap shoes eg Gordon Brown but obviously there is no point in buying expensive shoes to dig the garden. In this funny world I read that Cameron had to purchase some £13 wellies as the one's he had costing £200 were deemed too posh for his flood visits.
