REG - Shoe Zone PLC - Final Results
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RNS Number : 5927O Shoe Zone PLC 13 January 2026
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR. Upon the publication of this announcement via regulatory news service
this inside information is now considered to be in the public domain.
Shoe Zone plc
("Shoe Zone" or the "Company")
Final Results for the 52-week period to 27 September 2025
Shoe Zone is pleased to announce its audited results for the 52 weeks to 27
September 2025, (the "Period").
Financials
• Revenue of £149.1m (2024: £161.3m)
o Store revenue £113.1m (2024: £126.1m)
o Digital revenue £36.0m (2024: £35.2m)
• Profit before tax £3.3m (2024: £10.1m), adjusted £2.4m (1)
(2024: £10.0m) in line with management expectations
• Dividend £Nil, (2024: £1.2m, 2.5 pence per share)
• Net cash increased by 64% to £5.9m (2024: £3.6m)
• Earnings per share 4.08p (2024: 16.04p)
Operational
· 269 stores at Period end (2024: 297) comprising:
o 201 New larger format stores (2024: 185)
o 68 Original stores (2024: 112)
o 11 relocations,6 refits, 39 closures
· Annualised lease renewal savings of £0.1m on 30 renewals, an
average reduction of 8%
· Average lease length of 2.6 years (2024: 2.5 years)
· Digital returns rate of 11.9% (2024: 11.4%)
· Free next day delivery for all shoezone.com orders
Outlook
· Trading conditions remain challenging due to macro-economic
pressure and higher wages, with expected profit before tax of approximately
£1.0m for the year ending 3 October 2026.
(1) Adjusted to exclude foreign exchange revaluation gain
For further information please call:
Shoe Zone PLC Tel: +44 (0) 116 222 3001
Charles Smith (Chairman)
Terry Boot (Finance Director)
Zeus (Nominated Adviser and Broker) Tel: +44 (0) 203 829 5000
David Foreman, James Hornigold, Ed Beddows (Investment Banking)
Dominic King (Corporate Broking)
Chairman's statement
Introduction
This was a challenging year, particularly in the second half, as consumer
confidence declined further following the Government's October 2024 budget,
and highly adverse fiscal policies. Persistent inflation, higher interest
rates, and reduced disposable income contributed to negative economic and
consumer sentiment in the UK. Sales were good when there was a reason to buy,
such as the warm summer and the Back-To-School period, however, discretionary
spending remained subdued as consumers exercised greater caution in what they
were spending money on.
Profit before tax decreased to £3.3m (2024: £10.1m) and adjusted profit
before tax to £2.4m (2024: £10.0m), resulting in an earnings per share of
4.08p (2024: 16.04p).
Total revenue reduced by 7.6% to £149.1m (2024: £161.3m), trading out of 28
fewer stores, a 9.4% reduction. Digital revenues grew by 2.3% to £36.0m
(2024: £35.2m), supported by improved conversion from free next day delivery
on all shoezone.com orders and strong Amazon sales. We continue to invest in
our digital infrastructure and gained further benefit of increased
productivity and speed of throughput provided by improvements to our
distribution centre conveyor system.
We closed 39 stores, opened 11, and refitted 6 to our larger format, ending
the Period with 269 stores, consistent with management expectations.
Our average lease length is now 2.6 years, providing flexibility to adapt
quickly to changes in retail locations. Property supply continues to outstrip
demand, and we continued to take advantage of this environment to improve our
property portfolio.
Total capital expenditure reduced to £3.3m (2024: £11.4m), primarily due to
a lower number of refit and relocations completed, partly offset by landlord
rent-free periods.
We achieved rent reductions on 30 store renewals of £0.1m (2024: £0.4m) on
an annualised basis, an average reduction of 8%.
Strategy Update
Our store refit and relocation programme is on track to complete by the end of
2027, at which point our capital expenditure will further reduce, and we will
accelerate our digital strategy, building on recent strong results.
Capital expenditure
We plan to invest approximately £4.5m next year on 23 store projects and Head
Office infrastructure changes including IT projects and new vehicles.
Property
We closed the year with 201 new larger format stores and 68 original stores.
This year we expect to relocate or open a further 14 stores and continue to
close a number of older stores, and we will refit a minimum of 9 stores to our
new format.
We will continue to rollout our larger format by targeting key towns for
conversion or relocation. Our goal is to operate approximately 260 stores in
total, by the end of 2027, with all original stores having been refitted,
relocated or closed.
Digital
We continue to invest in our Digital platform. Our new mobile app will have
traded for 12 months during the full year and we will launch additional
revenue channels. We continue to trade with the shoezone.com permanent offer
of free next day delivery, which started in June 2024.
Part of the success of our digital operation is our efficient returns process,
supported by our extensive store network. We have a returns rate of
approximately 11.9% with the vast majority of these being returned to store.
Product
We expect product margins to improve next year, supported by stable container
prices over the past six months. Our buying and shipping teams are doing an
exceptional job of managing the direct from factory supply chain, which is
still volatile, and we are confident we are performing better than the market
average. As we refit existing stores to our larger format, the branded mix
will continue to form a higher proportion of our overall sales.
Dividend
No dividend was declared at the H1 2025, and we expect to continue our
effective prudent cash management with a £nil dividend for the full year
FY25.
Financial Review
During the Period, total revenue was £149.1m (2024: £161.3m) a reduction of
7.6%. Store revenue reduced by 10.3% to £113.1m (2024: £126.1m), trading out
of 28 fewer stores. Digital revenues increased by 2.3% to £36.0m (2024:
£35.2m).
Profit before Tax was £3.3m (2024: £10.1m), adjusted by foreign exchange
gains on revaluation (+£0.9m), therefore an adjusted Profit before Tax of
£2.4m (2024: £10.0m). The year-on-year reduction is due to the challenging
trading environment, driven by declining consumer confidence, a challenging UK
economic environment, and higher National Insurance and the National Living
Wage costs. We continue to actively reduce our cost base in all areas of the
business and have reduced our rent bill through proactive discussions with
landlords with further savings on renewals.
Product margins reduced to 61.0% (2024: 62.8%), impacted by higher container
prices in H1 and our "Buy one get one free" promotion in February 2025.
Statutory gross profit reduced by £7.9m to £27.6m, with a gross profit
margin of 18.5% (2024: £35.5m, 22.0%). The reduction reflects the sales
decrease, a reduced product margin, an increase in the depreciation charged,
higher digital related postage costs and additional wage costs due to the
increase in National Insurance and the National Living Wage.
Admin expenses decreased by £1.3m to £17.2m (2024: £18.5m) driven by
foreign exchange gains and the cancelling of the Company's profit share
scheme, partially offset by additional store impairments.
Distribution costs were maintained at £5.7m (2024: £5.7m). Wage costs
increased due to the National Insurance and National Living Wage increases,
offset by gains in operational efficiencies.
The corporation tax charge through the Income Statement is £1.4m (2024: tax
charge of £2.7m).
Earnings per share are 4.08p (2024: 16.04p).
Stock levels reduced by £5.4m to £32.6m (2024: £38.0m), which is due to the
lower number of stores and reduced Autumn/Winter 2025 intake as we carried
over higher levels of continuity product from the previous season.
Capital expenditure has reduced to £3.3m (2024: £11.5m) We continued our
programme of store relocations and refits to expand our new formats and
invested £2.5m, albeit a lower number of projects. We also invested £0.5m in
our central distribution centre to further improve our operational efficiency
and £0.2m on vehicles. This total is the gross value and is partially offset
by rent-free cash received via landlords when we open new stores, typically
equivalent to 12 month's rent.
At the year-end cash was £5.9m (2024: £3.6m). The increase in cash was due
to lower capital expenditure, lower intake, offset by the impact of lower
revenues. To note that within last year's cash balance there was an £8.0m
dividend payment.
The Shoe Zone pension scheme remains in surplus at £0.6m (2024: surplus of
£0.5m). This has remained stable because of the Group's asset-liabilities
matching strategies. The scheme's liabilities are covered by the buy-in
contracts (purchase of the buy-in contracts with Rothesay on 2 March 2023),
therefore the change in the liabilities was almost exactly matched by a
corresponding change in the insured assets. The Shoe Zone Pension Scheme asset
is not recognised in the statement of financial position. The Shoefayre scheme
is now in surplus of £0.9m (2024: deficit of £1.6m). The improvement is due
to an increase in bond yields, a slight reduction in future inflation
expectations and a change in mortality assumptions.
The Company uses derivative financial instruments, typically forward exchange
contracts, to hedge the risk of future foreign currency fluctuations. The
hedging policy enables the effective portion of changes in the fair value of
designated derivatives to be recognised in other comprehensive income.
Historically these movements would have been recognised in the income
statement.
Outlook
Trading conditions remained challenging in the first quarter of the new
financial year, with revenue down on forecast, reflecting ongoing
macro-economic pressures that continue to weigh on consumer confidence
resulting in lower footfall on the UK High Street, alongside the highly
adverse Government fiscal policies. The Government's November 2025 budget
included an additional increase in the National Living Wage, raising our cost
base further, with broader measures not materially improving consumer
sentiment. In light of these conditions, we expect a profit before tax of
approximately £1.0m for the financial year ended 3 October 2026.
Despite the headwinds, the Board remains focused on disciplined cost
management and delivering our strategic priorities to ensure resilience and
long-term growth, as demonstrated by our strong year-end cash position, which
increased by 64% to £5.9m compared to the prior year. Cash generation is
expected to continue into 2026, leaving the business well positioned to
capitalise when conditions improve.
Consolidated income statement for the 52 weeks ended 27 September 2025
52 weeks 52 weeks
ended 27 September 2025
ended 28 September 2024
£'000 £'000
Revenue 149,095 161,322
Cost of sales (121,458) (125,802)
Gross profit 27,637 35,520
Administration expenses (17,166) (18,540)
Distribution costs (5,702) (5,660)
Profit from operations 4,769 11,320
Finance expense (1,513) (1,204)
Profit before taxation 3,256 10,116
Taxation (1,367) (2,699)
Profit attributable to equity holders of the parent 1,889 7,417
Earnings per Share - basic and diluted 4.08p 16.04p
Consolidated statement of total comprehensive income for the 52 weeks ended 27 September 2025
52 weeks 52 weeks
ended 27 September 2025
ended 28 September
2024
£'000 £'000
Profit for the year 1,889 7,417
Items that will not be reclassified subsequently to the income statement
Remeasurement gain son defined benefit pension scheme 1,710 539
Movement in deferred tax on pension schemes (428) (135)
Items that will be reclassified subsequently to the income statement
Fair value movements on cash flow hedges 333 (649)
Tax (expense)/income on cash flow hedges (83) 162
Other comprehensive (expense)/ income for the year 1,532 (83)
Total comprehensive income for the year attributable 3,421 7,334
to equity holders of the parent
Consolidated statement of financial position as at 27 September 2025
Registered Number 08961190 52 weeks 52 weeks
ended
ended
27 September 2025 28 September 2024
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 19,712 23,938
Right-of-use assets 28,067 29,850
Total non-current assets 47,779 53,788
Current assets
Inventories 32,579 37,951
Trade and other receivables 4,538 4,472
Cash and cash equivalents 5,947 3,640
Deferred tax asset - 176
Corporation tax asset - 525
Total current assets 43,064 46,764
Total assets 90,843 100,552
Current liabilities
Trade and other payables (17,437) (24,677)
Lease liabilities (12,461) (12,862)
Deferred tax liability (298) -
Provisions (1,431) (2,707)
Total current liabilities (31,627) (40,246)
Non-current liabilities
Lease liabilities (22,144) (25,266)
Provisions (1,007) (767)
Employee benefit liability - (1,629)
Total non-current liabilities (23,151) (27,662)
Total liabilities (54,778) (67,908)
Net assets 36,065 32,644
Equity attributable to equity holders of the Company
Called up share capital 463 463
Merger reserve 2,662 2,662
Capital Redemption Reserve 37 37
Cash flow hedge reserve 175 (75)
Retained earnings 32,728 29,557
Total equity and reserves 36,065 32,644
Consolidated statement of changes in equity for the 52 weeks ended 27 September 2025
Share capital Capital Redemption reserve Merger Cash flow hedge reserve Retained earnings Total
reserve
£'000 £'000 £'000 £'000 £'000 £'000
At 1 October 2023 463 37 2,662 412 29,778 33,352
Profit for the year - - - - 7,417 7,417
Defined benefit pension movements - - - - 539 539
Cash flow hedge movements - - - (649) - (649)
Deferred tax on other comprehensive income - - - 162 (135) 27
Total comprehensive income for the year - - - (487) 7,821 7,334
Dividends paid during the year - - - - (8,042) (8,042)
Total contributions by and distributions to owners - - - - (8,042) (8,042)
At 28 September 2024 463 37 2,662 (75) 29,557 32,644
At 29 September 2024
Profit for the year - - - - 1,889 1,889
Defined benefit pension movements - - - - 1,710 1,710
Cash flow hedge movements - - - 333 - 333
Deferred tax on other comprehensive income - - - (83) (428) (511)
Total comprehensive income for the year - - - 250 3,171 3,421
Dividends paid during the year - - - - - -
Total contributions by and distributions to owners - - - - - -
At 27 September 2025 463 37 2,662 175 32,728 36,065
Share capital comprises the nominal value of shares subscribed for. The
capital redemption reserve represents share purchased by the company back from
shareholders.
The capital redemption reserve has arisen following the cancellation of shares
purchased by the company from shareholders.
The merger reserve has arisen as a result of the application of merger
accounting to the group reorganisation on 26 March 2014.
The cash flow hedge reserve comprises of gains/losses arising on the effective
portion of hedging instruments and is carried at fair value in a qualifying
cash flow hedge.
Retained earnings are all other net gains and losses and transactions with
owners (e.g. dividends) not recognised elsewhere.
Consolidated statement of cash flows for the 52 weeks ended 27 September 2025
52 weeks 52 weeks
ended 27 September 2025
ended 28 September
2024
£'000 £'000
Operating activities
Profit after tax 1,889 7,417
Corporation tax charge 1,367 2,699
Finance expense 1,513 1,204
Depreciation of property, plant and equipment 6,884 5,907
Fixed asset impairment and loss on disposal of property, plant and equipment 648 838
Right-of-use asset depreciation, impairment and loss on 11,695 11,793
disposal
23.996 29,858
Increase in trade and other receivables (66) (1,253)
Increase/(Decrease) in foreign exchange contract 138 (756)
Decrease/(Increase) in inventories 5,372 (4,199)
(Decrease)/Increase in trade and other payables (7,241) 323
Decrease in provisions (1,036) (318)
(2,833) (6,203)
Cash generated from operations 21,163 23,655
Net corporation tax paid (684) (2,679)
Net cash flows from operating activities 20,479 20,976
Investing activities
Purchase of property, plant and equipment (3,306) (11,505)
Net cash used in investing activities (3,306) (11,505)
Capital element of lease repayments (14,921) (14,339)
Interest received 55 196
Dividends paid during the year - (8,042)
Net cash used in financing activities (14,866) (22,185)
Net increase/(decrease) in cash and cash equivalents 2,307 (12,714)
Cash and cash equivalents at beginning of year 3,640 16,354
Cash and cash equivalents at end of year 5,947 3,640
Notes to the financial statements for the 52 weeks ended 27 September 2025
1. Accounting policies
General information
Shoe Zone plc (the ''Group") is a public company incorporated and domiciled in
England and Wales. The registered office is at Haramead Business Centre,
Humberstone Road, Leicester, LE1 2LH. The registered number of the Company is
08961190.
The Company and its subsidiaries' (collectively the Group) principal activity
is footwear retailing.
Basis of preparation
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied for
the 52 weeks ended 27 September 2025 (2024: 52 weeks ended 28 September 2024).
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards and Interpretations (collectively
IFRSs) issued by the International Accounting Standards Board (IASB) as
adopted by the UK ('UK adopted IFRSs') and those parts of the Companies Act
2006 that are applicable to companies that prepare financial statements in
accordance with IFRS.
The consolidated financial statements have been prepared on a going concern
basis and under the historical cost convention, as modified for the
revaluation of certain financial assets and financial liabilities at fair
value.
The preparation of financial statements in compliance with adopted IFRS
requires the use of certain critical accounting estimates. It also requires
management to exercise judgement in applying the Group's accounting policies.
The areas where significant judgements and estimates have been made in
preparing the financial statements and their effect are disclosed in note 2.
The consolidated financial statements are presented in Sterling, which is also
the Group's functional currency.
Amounts are rounded to the nearest thousand, unless otherwise stated.
Basis of consolidation
The consolidated financial statements incorporating the financial statements
of Shoe Zone plc and its subsidiary undertakings are all made up to 27
September 2025. The results for all subsidiary companies are consolidated
using the acquisition method of accounting.
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the Company and
its subsidiaries ('the Group') as if they formed a single entity. Intercompany
transactions and balances between group companies are therefore eliminated in
full.
In the statement of financial position, the acquiree's identifiable assets,
liabilities and contingent liabilities are initially recognised at their fair
values at the acquisition date. The results of acquired operations are
included in the consolidated income statement from the date on which control
is obtained. They are deconsolidated from the date on which control ceases.
Notes to the financial statements for the 52 weeks ended 27 September 2025
(continued)
Accounting policies (continued)
Going Concern
The Directors consider that the business is a going concern and that it is
appropriate to prepare the financial statements on a going concern basis. In
reaching this conclusion, the Directors have assessed the Group's current
performance and position and factors that may affect the Group's future
prospects.
The business has experienced challenging trading conditions due to a weakening
in consumer confidence, which resulted in profit downgrades announced in
December 2024 and August 2025. The Directors have reviewed the capital
expenditure commitment, staffing levels, additional sales promotions, store
numbers and all costs, and will use all of these levers to protect the cash
position. The Directors have also considered, should there be a significant
but plausible downside scenario of a further 3% and 5% reduction, the
mitigating steps that can be taken by reducing capital expenditure and intake,
along with further cost cutting measures to protect the revised cash position.
The Directors have reviewed forecasts and cash projections and consider that
the Group has adequate banking facilities and cash resources to meet its
operational and capital commitments. The latest cash forecasts provide
significant headroom within the available banking facilities, even when
sensitized.
The new store and refit programme results, along with the positive digital
performance, combined with the satisfactory cash position gives the Directors
a reasonable basis on which to satisfy themselves that the business is a going
concern. The Group has prepared forecasts and budgets which shows the Group
has sufficient cash to meet its day-to-day liabilities as they fall due. On
that basis, the Directors have prepared the financial statements on a going
concern basis.
Revenue
Revenue is measured at the fair value of the consideration received, or
receivable, and represents amounts receivable for goods supplied, stated net
of discounts, return and value added taxes. In the case of goods sold through
retail stores, revenue is recognised when we have satisfied the performance
obligation of transferring the goods to the customer at the point of sale. In
the case of goods sold on the internet, revenue is recognised when we have
satisfied the performance obligation of transferring the goods to the
customer, which is at the point of delivery to the customer.
At the point of sale, a provision is made for the level of expected returns
based on previous experience.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As
well as purchase price, cost includes directly attributable costs.
Depreciation is provided on all items of property, plant and equipment so as
to write off their carrying value over the expected useful economic lives. It
is provided at the following rates:
Freehold and long leasehold
properties
- 50 years on a straight line basis
Short leasehold and leasehold improvements
- 5-10 years on a straight line basis
Fixtures and fittings
- 5-10 years on a straight line
basis
Motor vehicles
- 3-5 years on a straight
line basis
No depreciation is provided against freehold land or assets under
construction. Depreciation is provided against freehold shop properties
writing off the original cost less estimated residual value over the useful
economic life of the property which is estimated to be 50 years.
Notes to the financial statements for the 52 weeks ended 27 September 2025
(continued)
Accounting policies (continued)
Assets under construction
Whilst held under assets under construction, no depreciation is charged on the
assets. Once the project is completed, the asset will be transferred to the
correct fixed asset category.
Impairment of non-financial assets
The carrying values of non-financial assets are reviewed in conjunction with
an independent third party for impairment when there is an indication that
assets might be impaired. When the carrying value of an asset exceeds its
recoverable amount, the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual
asset, the impairment test is carried out on the asset's cash generating unit
(i.e. the smallest group of assets in which the asset belongs for which there
are separable identifiable cash flows).
Impairment charges are included in the consolidated income statement in cost
of sales, except to the extent they reverse previous gains recognised in the
consolidated statement of total comprehensive income.
Inventories
Inventories are initially recognised at cost on a first in first out basis,
and subsequently at the lower of cost and net realisable value. Cost comprises
all costs of purchase, costs of conversion and other costs incurred in
bringing the inventories to their present location and condition.
Financial assets
The Group classified its financial assets into the categories, discussed
below, due to the purpose for which the asset was acquired. The Group has not
classified any of its financial assets as held to maturity.
The Group documents at the inception of the transaction the relationship
between hedging instruments and hedged items, as well as its risk management
objectives and strategy for undertaking various hedging transactions. The
Group also documents its assessment, both at hedge inception and on an ongoing
basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of hedged
items.
Cash and cash equivalents include cash in hand and deposits held at call with
banks.
Loans and receivables
Loans and receivable assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They arise
principally through the provision of goods to customers (e.g. trade
receivables) but also incorporate other types of contractual monetary asset.
They are initially recognised at fair value plus transaction costs that are
directly attributable to their acquisition or issue and are subsequently
carried at amortised cost using the effective interest rate method, less
provision for impairment.
The Group's loans and receivables comprise trade and other receivables and
cash and cash equivalents included within the consolidated statement of
financial position.
Impairment provisions are recognised when there is objective evidence (such as
significant financial difficulties on the part of the counterparty or default
or significant delay in payment) that the Group will be unable to collect all
of the amounts due under the terms receivable, the amount of such a provision
being the difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired receivable. For
trade receivables, which are reported net, such provisions are recorded in a
separate allowance account with the loss being recognised within
administrative expenses in the consolidated income statement. On confirmation
that the trade receivable will not be collectable, the gross carrying value of
the asset is written off against the associated provision.
Notes to the financial statements for the 52 weeks ended 27 September 2025
(continued)
Accounting policies (continued)
Financial liabilities
The Group classified its financial liabilities as other financial liabilities
which include the following:
· Trade payables and other short-term monetary liabilities, which
are initially recognised at fair value and subsequently carried at amortised
cost using the effective interest method.
· Finance costs are charged to the income statement over the term
of the debt using the effective interest method so that the amount charged is
at a constant rate on the carrying amount. Issue costs are initially
recognised as a reduction in the proceeds of the associated capital
instrument.
Derivative financial instruments and hedging activities
Hedge accounting is applied to financial assets and financial liabilities only
where all of the following criteria are met:
At the inception of the hedge relationship the Group documents the
relationship between the hedging instrument and the hedged item, along with
its risk management and its strategy for undertaking various hedge
transactions. Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instrument is highly effective
in offsetting changes in cash flows of the hedged item attributable to the
hedged risk, which is when the hedging relationships meet all of the following
hedge effectiveness requirements:
· There is an economic relationship between the hedged item and
hedged instrument;
· The effect of credit risk does not dominate the value changes
that result from that economic relationship; and
· The hedge ratio of the hedging relationship is the same as that
resulting from the quantity of the hedged item that the Group actually hedges
and the quantity of the hedging instrument the Group actually uses to hedge
the quantity of the hedged item.
The Group uses derivative financial instruments such as forward foreign
exchange contracts to hedge its risks associated with foreign currency
fluctuations. Such derivative financial instruments are initially measured at
fair value and subsequently remeasured at fair value. The fair value of
forward foreign exchange contracts is calculated by reference to current
forward exchange rates for contracts with similar maturity profiles.
The effective portion of changes in the fair value of derivatives that are
designated and qualify as cash flow hedges is recognised in other
comprehensive income. The gain or loss relating to the ineffective portion is
recognised immediately in cost of sales in the income statement.
Amounts accumulated in equity are reclassified to inventories in the period
when the purchase occurs, matching the hedged transaction. The cash flows are
expected to occur and impact on profit and loss within 12 months from the year
end.
When a hedging instrument expires or is sold, or when a hedge no longer meets
the criteria for hedge accounting, any cumulative gain or loss previously
recognised in equity is retained in equity and is recognised when the forecast
transaction is ultimately recognised in cost of sales in the income
statement. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was reported in equity is immediately transferred
to the income statement.
Deferred
taxation
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability in the statement of financial position differs from
its tax base.
Recognition of deferred tax assets is restricted to those instances where it
is probable that taxable profit will be available against which the difference
can be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the statement of financial position
date and are expected to apply when the deferred tax liabilities or assets are
settled or recovered. Deferred tax balances are not discounted.
Notes to the financial statements for the 52 weeks ended 27 September 2025
(continued)
Accounting policies (continued)
Deferred tax assets are offset when the Group has legally enforceable rights
to set off current tax assets against current tax liabilities and the deferred
tax liabilities relate to taxes levied by the same tax authority on either:
· the same taxable group company; or
· different company entities which intend to either settle current
tax assets and liabilities on a net basis, or to realise the assets and settle
the liabilities simultaneously, in each future period in which significant
amounts of deferred tax assets and liabilities are expected to be settled or
recovered.
Provisions
Provision for dilapidations is made at the best estimate of the expenditure
required to settle the obligation at the reporting date, where material,
discounted at the pre-tax rate reflecting current market assessments of the
time value of money and risks specific to the liability. A dilapidation
provision is only recognised on those properties which are likely to be
exited. Where such property is identified the full costs expected are
recognised. This provision relates to the liability of 'wear and tear'
incurred on the leasehold properties and does not include any removal of shop
refits as experience indicates that liabilities do not arise for removal of
shop refits. Dilapidations are not included in recognised assets as they
relate to 'wear and tear' and not structural alterations to the buildings.
Foreign exchange
Transactions entered into the Group entities in a currency other than the
functional currency are recorded at the average monthly rate prevailing during
the year. Foreign currency monetary assets and liabilities are translated at
the rates ruling at the reporting date.
Foreign exchange differences are recognised in the income statement.
Retirement benefits - defined contribution and benefit schemes
The Group operates both defined benefit and defined contribution funded
pension schemes. The schemes are administered by trustees and are independent
of the Group.
Contributions to defined contribution schemes are charged to the consolidated
income statement in the year to which they relate.
Defined benefit scheme surpluses and deficits are measured at:
· the fair value of plan assets at the reporting date; less
· plan liabilities calculated using the projected unit credit
method discounted to its present value using yields available on high quality
corporate bonds that have maturity dates approximating to the terms of the
liabilities; plus
· unrecognised past service costs; less
· the effect of minimum funding requirements agreed with scheme
trustees.
Re-measurements of the net defined obligation are recognised directly within
equity. These include actuarial gains and losses, return on plan assets
(interest exclusive) and any asset ceilings (interest exclusive).
Service costs are recognised in the income statement and include current and
past service costs as well as gains and losses on curtailments.
Net interest expense (income) is recognised in the income statement and is
calculated by applying the discount rate used to measure the defined benefit
obligation (asset) at the beginning of the annual period to the balance of the
net defined benefit obligation (asset), considering the effects of
contributions and benefit payments during the year.
Gains or losses arising from changes to scheme benefits or scheme curtailments
are recognised immediately in the income statement.
Settlements of defined benefit schemes are recognised in the period in which
the settlement occurs.
A net pension asset may only be recognized when the group has an unconditional
right to a refund or to reductions in future contributions. As a result, no
asset has been recognised at year end.
Notes to the financial statements for the 52 weeks ended 27 September 2025
(continued)
Accounting policies (continued)
Dividends
Dividends, including interim dividends, are recognized when they become
legally payable. In the case of final and special dividends, this is when
approved by the shareholders at the AGM.
Lessee accounting
The Group leases various properties as well as vehicles under lease
agreements. At inception of a contract the Group assesses whether the contract
contains a lease. A lease is present where the contract grants the right to
control the asset for a period of time in exchange for consideration. Where a
lease is identified a right of use asset and a corresponding lease liability
is recognized, other than leases classed as "Short term," less than 12 months,
or "Low value," under the available exemptions. Where the exemption has been
taken advantage of the lease cost are recognized on a straight-line basis over
the life of the lease within the Consolidated Income Statement.
The lease payments are discounted using the Group's incremental borrowing rate
of 6.06%.
Lease liability- initial recognition
The lease liability is initially measured at the present value of the lease
payments not paid at the commencement date. If the discount rate isn't
explicitly included in the lease the payments are discounted at the Group's
incremental borrowing rate.
Lease payments included within the initial recognition include:
§ Fixed payments (including in-substance fixed payments)
§ Variable lease payments that depend on an index or rate at the commencement
date
§ Amounts expected to be payable by the lessee under residual value
guarantees
§ Exercise price of a purchase option if the Group is reasonably certain to
exercise that option
§ Payments for penalties for terminating the lease if the lease term reflects
the Group exercising the option
Lease liability- subsequent measurement
The lease liability is subsequently measured by increasing the carrying value
to reflect interest on the lease liability and by reducing the carrying value
to reflect the lease payments.
Lease liability- remeasurement
The lease liability is remeasured where:
§ Change in the assessment of the original lease information; being a change
in the lease term or exercise of a purchase option.
§ Lease payments change due to a change in an index or a rate or a change in
expected payment under the residual value guarantee
§ The lease contract is modified and the lease modification isn't treated as
a separate lease
Notes to the financial statements for the 52 weeks ended 27 September 2025
(continued)
Accounting policies (continued)
Right of use asset- initial recognition
The right of use asset comprises of the following:
§ Initial measurement of the lease liability
§ Any lease payments made at the commencement date, less any lease incentives
received
§ Any initial direct costs incurred by the group in taking out the lease
§ Estimate of costs to be incurred by the group to restore the underlying
asset to the condition required by the lease
Right of use asset- subsequent measurement
The right of use asset is depreciated over the shorter of the lease term and
useful life of the asset on a straight-line basis.
· If a change in contract has been identified, see the "Lease
liability- remeasurement" section for further information, the right of use
asset will also be adjusted.
· An impairment review will be undertaken in line with the group
impairment policy, as further described in note 1, any identified impairment
will be recognised against the right of use asset.
· Where the lease liability is remeasured, an equivalent adjustment
is made to the right of use asset unless its carrying value is reduced to
zero, in which case the adjustment is recognised in the consolidated income
statement.
· When the lease liability is remeasured a revised discount rate is
used based on the contract, or if none is available the Groups incremental
borrowing rate.
Notes to the financial statements for the 52 weeks ended 27 September 2025
(continued)
Accounting policies (continued)
New Accounting Standards, Interpretations and
Amendments and Standards in Issue but not Yet Effective
The Group has not early adopted any new
accounting standard, interpretation or amendment that has been issued but is
not effective.
At the date of authorisation of these
consolidated Financial Statements, there are no standards in issue from the
International Accounting Standards Board ("IASB") or International Financial
Reporting Interpretations Committee ("IFRIC") which are effective for annual
accounting periods beginning on or after 27 September 2025 that will have a
material impact on these Financial Statements.
2. Critical accounting estimates and judgements
The Shoe Zone plc Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Accounting estimates and assumptions
Retirement benefits:
The Groups' defined benefit schemes' pension surplus/obligation, which is
assessed each period by actuaries, is based on key assumptions including
discount rates, mortality rates, inflation, future salary costs and pension
costs. These assumptions, individually or collectively, may be different to
actual outcomes. A net pension asset may only be recognized when the group has
an unconditional right to a refund or to reductions in future contributions.
As a result, no asset has been recognised at year end.
Estimated impairment of store assets:
The Group tests whether store assets, being IFRS 16 right-of-use assets and
associate leasehold improvements, fixtures and fittings, have suffered any
impairment in accordance with the accounting policies stated in note 1.
The recoverable amount of cash-generating units is determined on a
value-in-use calculation. For impairment testing purposes the Group has
determined that each store is a separate CGU. The recoverable amount is
calculated based on the Group's latest forecast cash flows which are then
extrapolated to cover the period to the break date of the lease taking into
account historic performance and knowledge of the current market, together
with the Group's views of future profitability of each CGU. The method
requires an estimate of future cash flows and the selection of a suitable
discount rate in order to calculate the net present value of cash flows.
The value in use is calculated based on five year cash flow projections. The
key assumptions in the calculations are the sales growth rates, gross margin
rates, changes in the operating cost base and the pre-tax discount rate
derived from the Group's weighted average cost of capital using the capital
asset pricing model, the inputs of which include a risk-free rate, equity risk
premium and a risk adjustment (Beta). Given the number of assumptions used
the assessment involves significant estimation uncertainty.
Critical accounting estimates and judgements (continued)
The key assumptions, which are equally applicable to each CGU, in the cash
flow projections used to support the carrying amount of store assets were as
follows:
Key assumptions FY25 Year 1 Year 2 Year 3 Year 4 Year 5
Sales increase 0% 2% 2% 2% 2%
Existing gross margin movement 2% 2% 1% 0% 0%
Operating costs increase per annum 4% 3% 2% 2% 2%
Discount rate 8% 8% 8% 8% 8%
Terminal growth rate 2% 2% 2% 2% 2%
Key assumptions FY24 Year 1 Year 2 Year 3 Year 4 Year 5
Sales increase (1.8)% 3% 3% 2% 2%
Existing gross margin movement 0.5% 2% 0% 0% 0%
Operating costs increase per annum 6.0% 4% 3% 3% 3%
Discount rate 12% 12% 12% 12% 12%
Terminal growth rate 2% 2% 2% 2% 2%
The Group has performed a sensitivity analysis on the impairment tests for its
store portfolio using various reasonably possible scenarios. An increase of
three percentage points in the post-tax discount rate would have resulted in
no increase to the impairment charge. A decrease of one percentage point in
the growth rate after year three would have resulted in no change to the
impairment charge.
Estimated useful life of property, plant and equipment:
At the date of capitalising property, plant and equipment, the Group estimates
the useful life of the asset based on management's judgement and experience.
Due to the significance of capital investment to the Group, variances between
actual and estimated useful economic lives could impact results both
positively and negatively.
Judgements
Foreign currency hedge accounting:
Group policy is to adopt hedge accounting for cash flows for the purchase of
goods for resale. Due to the degree of judgement in determining forecast cash
flows there is a risk that the assumptions made in the effectiveness testing
are inappropriate.
Leases: Discount rate - The weighted average lessee's incremental borrowing
rate applied to the lease liabilities on 27 September 2025 was 4.57%.
3. Segmental information
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker has been identified as the management team including the
Chairman, Chief Executive and Finance Director.
The Board considers that each store is an operating segment but there is only
one reporting segment as the stores qualify for aggregation, as defined under
IFRS 8. The Directors now consider Digital to be its own operating segment.
Management reviews the performance of the Group by reference to total results
against budget. The total profit measures are operating profit and profit for
the year, both disclosed on the face of the consolidated income statement. No
differences exist between the basis of preparation of the performance measures
used by management and the figures in the Group financial statements.
52 weeks 52 weeks
ended 27 September
ended 28 September 2024
2025
£'000 £'000
Revenue
United Kingdom stores 112,658 125,594
Digital 36,065 35,248
Jersey 372 480
149,095 161,322
There are no customers with turnover in excess of 10% of total turnover.
52 weeks 52 weeks
ended 27 September 2025
ended 28 September 2024
£'000 £'000
Non-current assets excluding deferred tax asset by location:
United Kingdom 47,779 53,788
47,779 53,788
Digital non-current and current assets have not been disclosed due to the
immaterial value. The UK store contribution is £14.7m (2024: £22.2m) and
digital contribution is £7.3m (2024: £9.0m), the total contribution being
£22.0m. The difference between this and the stated profit before tax on the
consolidated income statement, is the remaining head office and central
warehousing costs, financing charges and interest.
4. Dividends
52 weeks ended 27 52 weeks
September
ended 28 September 2024
2025
£'000 £'000
Dividends paid during the year - 8,042
5. Share capital
27 28
September
September
2025
2024
£'000 £'000
Share capital issued and fully paid
46,250,000 (2024:46,250,000) ordinary shares of 1p each 463 463
Ordinary shares carry the right to one vote per share at general meetings of
the company and the rights to share in any distribution of profits or returns
of capital and to share in any residual assets available for distribution in
the event of a winding up.
6. Earnings per share
Earnings per share is calculated by dividing profit for the year by the weighted average number of shares outstanding during the year.
27 September 2025 28 September 2024
£'000 £'000
Numerator
Profit for the year and earnings used in basic and diluted EPS 4.08p 16.04p
27 September 2025 28 September
2024
Denominator
Weighted average number of shares used in basic and diluted EPS 46,250,000 46,250,000
7. Ultimate controlling party
The company is controlled by the Smith family albeit there is not a single
controlling party.
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