A Shoe Zone store in Wakefield
Cut-price footwear purveyor is one of the best performing retail stocks / Image source: Shoe Zone
  • Shoe Zone saw bumper sales in June
  • Improved margins expected to continue
  • Zeus Capital hikes profit forecast by 28.6%

Cash-strapped consumers continue to flock to Shoe Zone (SHOE:AIM) in a bid to beat the cost-of-living squeeze judging by a second significant profit upgrade in as many months from the value footwear retailer.

Shares in the discount boots, shoes, trainers and slippers seller skipped ahead 9.6% to 257.5p on the news strong trading momentum continued through June and early July and Shoe Zone now expects adjusted pre-tax profit for the year ending 2 October 2023 to be ‘not less than £13.5 million’ as a result.

This prompted Zeus Capital to hike its profit forecast by 28.6%, from £10.5 million to £13.5 million, in line with management’s guidance, with the house broker’s revenue estimate upped by 2.4% to £163.7 million.

‘We reiterate our belief that Shoe Zone’s current valuation remains undemanding for one of the best performing retail stocks on the market,’ commented Zeus.

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Since last updating the market on 9 June, Shoe Zone has achieved ‘an exceptional month of sales’ with trading significantly exceeding management expectations amid bumper ongoing demand.

A beneficiary of the big physical retail recovery, Shoe Zone said volumes were up double digits on last year, with no price increases on the Leicester-based retailer’s core ranges, while margins have improved thanks to lower container rates and favourable foreign exchange rates.

Chief executive Anthony Smith and suitably-named finance director Terry Boot expect these improved margins to continue for the rest of the financial year.




Zeus pointed out that Shoe Zone operates in a defensive subsector of the consumer market, with its core product offer ‘representing a staple-like rather than a discretionary purchase’.

The broker believes ongoing consumer price inflation is driving demand for Shoe Zone’s ‘compelling value proposition, reflected in the strong demand seen through June and early July. This provides positive momentum ahead of the group’s key back-to-school trading period, creating scope for further earnings upgrades in our view.’

Zeus added that Shoe Zone’s ongoing store transformation ‘offers scope for meaningful earnings growth, supplemented by a growing digital offering that allows it to capture further market share’.


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Issue Date: 12 Jul 2023