Shoe Zone (SHOE) shares didn't react too well to these results as concerns mount regarding the group's exposure to unfavourable exchange rates. City analysts have nudged forecasts down, also citing additional exit charges relating to property leases as the retailer continues to streamline its store estate. That largely accounts for the dip in half-year revenues, which fell 2 per cent as the group opened nine new sites, but ultimately closed 12.
Although the market seems concerned about how much Shoe Zone imports from the Far East - it resulted in a £893,000 exceptional charge during the period from unhedged stock orders - chief executive Nick Davis is fairly sanguine. Going forward, between 90 and 95 per cent of the group's forecast purchases have been hedged, while the anniversary of the pound's collapse in June 2016 means the impact should be far lower. Furthermore, the company actually benefited from lower business rates and a £176,000 rental saving.
As for the consumer environment, Mr Davis says he's seen no discernible drop-off in demand. Given Shoe Zone's value-based proposition, the group has worked hard to promote multi-buy offers to customers, which have been received well.
Analysts at Numis expect pre-tax profits of £10m for the year ending September, giving EPS of 16.5p, from £10.3m and 17p in FY2016.
SHOE ZONE (SHOE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 181p | MARKET VALUE: | £90m | |
| TOUCH: | 179-182p | 12-MONTH HIGH: | 199p | LOW: 131p |
| DIVIDEND YIELD*: | 5.7% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 53p | NET CASH: | £4.6m | |
| Half-year to 1 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 74.6 | 1.9 | 3.1 | 3.30 |
| 2017 | 72.9 | 0.3 | 0.5 | 3.40 |
| % change | -2 | -84 | -84 | +3 |
Ex-div: 20 Jul Payment: 16 Aug *Not including special dividend of 8p, paid in Mar 2017 | ||||
