UK retailer Shoe Zone says December trading conditions 'very challenging'
18/12/2024 09:06
LONDON, Dec 18 (Reuters) - Small British discount
retailer Shoe Zone SHOE.L on Wednesday highlighted "very
challenging trading conditions" in the first half of December,
potentially unsettling nerves across the wider sector with just
a week to go in the countdown to Christmas.
Shoe Zone, which trades from 297 stores across the UK and
online, warned on profit for its 2024/25 year and its shares
crashed 39%.
It said that in October, November and the first half of
December, it experienced "very challenging trading conditions,
principally a weakening of consumer confidence and unseasonal
weather, both of which have decreased revenue and profit."
Veteran independent retail analyst Nick Bubb said Shoe
Zone's profit alert "could rattle a few nerves in the sector."
Shoe Zone said consumer confidence had weakened further
following the new Labour government's tax raising budget at the
end of October, echoing comments from Sports Direct owner
Frasers FRAS.L earlier this month.
Analysts expect Britain's listed food retailers - market
leader Tesco TSCO.L , No. 2 Sainsbury's SBRY.L , Marks &
Spencer MKS.L and online player Ocado OCDO.L - to continue
their strong performances through 2024 and perform well at
Christmas.
However, they are concerned that the consumer mood around
non-food retail may have darkened after the budget, despite
survey data saying it improved in December.
Shoe Zone said additional costs from budget measures
increasing employer national insurance contributions and the
minimum wage have resulted in the planned closure of a number of
stores.
It cut its forecast for adjusted profit before tax for its
2024/25 year to not less than 5 million pounds from 10 million
pounds ($13 million) and said it would not pay a final dividend
for its 2023/24 year.
($1 = 0.7882 pounds)
(Reporting by James Davey
Editing by Tomasz Janowski)
((james.davey@thomsonreuters.com))