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(Sharecast News) - Shoe Zone warned on Thursday that full-year profits were set to fall a little short of its recently-downgraded expectations, amid a drop in sales and higher costs.
In a trading update for the year to 27 September, the value shoe retailer said it now expects full-year adjusted pre-tax profit of about 2.4m, down from 10m in FY24. In a trading update in August, the company downgraded its full-year adjusted pre-tax profit guidance to "approximately" 2.5m, down from previous expectations of 5m.
"The reduction, compared to FY2024, is due to the sales reduction, year-on-year increases in National insurance, depreciation, National Living Wage and first half container prices," it said.
Shoe Zone said revenue fell 7.6% on the year to 149.1m "due to a decline in consumer confidence and the general negativity in the UK", as well as trading out of 28 fewer stores.
However, the key weeks of Back-to-School trade were in line with expectations, with revenue from the digital segment up 2.3%.
The company said it remains cautious over the near-term outlook, with trading conditions expected to remain subdued.
"We continue to monitor the macro-economic environment closely and await the outcome of the November UK Budget in the coming weeks," it said.
Chairman Charles Smith said: "This was a challenging year, particularly in the second half, as consumer confidence fell following the Government's October 2024 budget, with persistent inflation, higher interest rates and reduced levels of disposable income all contributing to general negative economic and consumer sentiment in the UK.
"Sales were good when there was a clear reason to buy, such as the warm summer and the Back-To-School season. However, overall discretionary spending remains subdued as consumers exercise greater caution in their expenditure.
"Digital revenue outperformed last year and the ongoing strategy of refitting and relocating stores to our larger format continued, with 201 conversions completed, alongside net cash levels improving year-on-year."
At 0905 BST, the shares were down 7% at 66.50p.