Morning folks,

Today we have a profit warning from Shoe Zone (LON:SHOE) and an update from Gear4music that is in line with expectations. We also have results from Clipper Logistics (LON:CLG)

After that, I may look at a few stories that I missed earlier in the week.

Cheers

Graham



Shoe Zone (LON:SHOE)

  • Share price: 134p (-30%)
  • No. of shares: 50 million
  • Market cap: £67 million

Board changes and trading update

The 30% fall in share price today looks reasonable after a dire update.

The CEO has tendered his resignation, "in order to leave Shoe Zone and pursue other business interests". He leaves immediately.

I always hate seeing an abrupt departure like this. To me, it suggests that there was a falling out or some other sort of conflict at the top of the company. If you're leaving a company you care about, and if you've done a good job as CEO, why wouldn't some form of transition be arranged, some period of time in which the company can think about finding a replacement?

The two brothers who have managed Shoe Zone together for the past 20 years clearly feel that they are up to the task, and won't be seeking a replacement. Instead, one of the brothers returns to his original role as CEO, and the other will remain as COO.

Trading update - it's hardly a coincidence that the CEO is leaving on the same day as a nasty profit warning.

This year will be below expectations (not quantified).

The "tough high street trading environment" is blamed.

Shoe Zone stood out as a share which was seemingly immune to high street conditions. As a provider of very cheap footwear, some of us thought that its business would stay firm even as other retailers struggled. Now we know that this isn't quite true. Perhaps the declining footfall has finally started to take its toll?

There is a property writedown of £3.1 million, to £5.3 million. Freehold properties on the high street simply aren't worth what they used to be. The flipside of declining property values is that Shoe Zone is able to negotiate rent reductions at many stores.

Finally, there will be no special dividend this year. The special was worth 8p last…

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