Shoe Zone’s (SHOE) business model has undergone a fundamental shift towards what it calls its ‘Big Box’ format – cleaner, more modern stores in out of town, or “destination”, locations. This has been part of a wider strategy to re-align the group’s property portfolio, bringing down rent and rate costs, and making the organisation much more efficient. Recently, it offloaded five freehold properties via sale and leaseback arrangements, boosting the cash coffers by £1.2m. It still retains 14 other freeholds, but chief financial officer Jonathan Fearn said there are no immediate plans for further disposals.
Half-year profits from operations topped £1m thanks to continued cost-cutting and relative margin stability. Rent renewals fell by a fifth on average – equivalent to annual savings of £100,000 – while administrative expenses also contracted thanks to the annualisation of last year’s foreign exchange-driven dent. As for the second half, bosses are trialling new fixtures and fittings across the existing estate in the hope of driving costs down even further.
Analysts at finnCap still expect pre-tax profits of £10.1m for the year ending September 2018, giving EPS of 16.2p, compared to £9.5m and 15.8p in FY2017.
SHOE ZONE (SHOE) | ||||
ORD PRICE: | 171p | MARKET VALUE: | £ 85m | |
TOUCH: | 167-174p | 12-MONTH HIGH: | 188p | LOW: 146p |
DIVIDEND YIELD: | 6.0% | PE RATIO: | 10 | |
NET ASSET VALUE: | 59p | NET CASH: | £5.9m |
Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2017 | 72.9 | 0.31 | 0.5 | 3.4 |
2018 | 73.7 | 0.96 | 1.7 | 3.5 |
% change | +1 | +209 | +240 | +3 |
Ex-div: | 19 Jul | |||
Payment: | 15 Aug | |||