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Shoe Zone jumps on special news

The footwear retailer is making good on its promises to return excess cash to shareholders
January 9, 2019

Shoe Zone (SHOE) is making good on its pledge to return 60 per cent of post-tax earnings to shareholders, as well as any surplus cash above £11m. By ending the last financial year with £15.7m on the balance sheet, investors in the footwear retailer will receive an 8p special dividend in late March. On top of a 13 per cent rise in the ordinary payout, this left total dividends up by 91.2 per cent to 19.5p a share.  

IC TIP: Buy at 198p

Shoe Zone operates from 492 stores, having opened 16 and closed 20 during the past year. Of those openings, around 10 were what the company calls its “Big Box” format – cleaner, more modern stores located out-of-town or in retail parks. Reorganising the property portfolio appears to be working: rent renewals fell by almost a quarter on average last year, amounting to a saving of £431,000, while the average lease length now only stretches to just beyond two years.

Analysts at broker finnCap upgraded their numbers and now expect “conservatively framed” pre-tax profits of £11m for the year ending September 2019, giving EPS of 17.6p, compared with £11.3m and 19p in FY2018.

SHOE ZONE (SHOE)   
ORD PRICE:198pMARKET VALUE:£99m
TOUCH:195-200p12-MONTH HIGH:203pLOW: 146p
DIVIDEND YIELD:5.8%*PE RATIO:10
NET ASSET VALUE:77pNET CASH:£15.7m
    Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201417310.516.13.6
201516710.116.29.7
201616010.316.910.1
20171589.515.810.2
201816111.319.011.5
% change+2+18+21+13
Ex-div:28 Feb   
Payment:20 Mar   
*Excludes special dividend worth 8p a share