Value footwear retailer Shoe Zone (SHOE) is set to unveil its first full-year results as a listed company next week. We already know from a pre-close trading statement in October that profit will be in line with analysts' expectations of 17.8p per share, while sales will fall from £193.9m to £172.5m.
But the fall in sales is not cause for alarm. It's part of the group's strategy of focusing on earnings growth rather than revenue growth by constantly rearranging the store estate to squeeze out every penny of profit. Leases are short, averaging three years, with more than 100 leases up for renewal each year, on average. That allows Shoe Zone to capitalise on the fact that rents across most UK high streets have been falling.
The Aim-listed retailer seems to have largely avoided the weather-related problems affecting much of the high street last autumn. September was slow, with a late start to the boot season, but that followed Shoe Zone's best ever August. Chief executive Anthony Smith also said in October that the first two weeks of the new financial year had been good, with the boot season "in full swing". The cash position should also finish the financial year considerably ahead of prior expectations, at £8.5m, compared with forecasts of roughly £6m.
